GOVERNMENT   CONTROL  OF  THE  SUGAR 
INDUSTRY   IN  THE   UNITED   STATES 


THE  MACMILLAN  COMPANY 

NEW  YORK   •    BOSTON   •    CHICAGO  •    DALLAS 
ATLANTA  •    SAN   FRANCISCO 

MACMILLAN  &  CO.,  LIMITED 

LONDON  •    BOMBAY  •    CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA,  LTD. 

TORONTO 


GOVERNMENT  CONTROL  OF 

THE  SUGAR  INDUSTRY  IN 

THE  UNITED  STATES 

AN  ACCOUNT  OF  THE  WORK  OF  THE  UNITED  STATES 

FOOD   ADMINISTRATION   AND   THE   UNITED 

STATES  SUGAR  EQUALIZATION  BOARD,  INC 


BY 

JOSHUA   BERNHARDT 

SUGAR  STATISTICIAN  UNITED  STATES  FOOD  ADMINISTRATION 

AND    CHIEF,    STATISTICAL    DEPARTMENT,    UNITED 

STATES  SUGAR  EQUALIZATION  BOARD,  INC. 


Neto  gorfc 

THE   MACMILLAN   COMPANY 
1920 

AU  rights  rtttrvtd 


INTRODUCTION 

THE  distortions  in  the  world's  sugar  industry  and 
trade,1  consequent  upon  the  upheaval  of  the  Great  War, 
affected  the  United  States  almost  as  seriously  as  it  did 
the  European  belligerents.  The  problem  of  procuring 
adequate  sugar  supplies  for  the  United  States  and 
stabilizing  the  price  of  this  peculiarly  indispensable 
commodity,  which  "has  grown  during  the  last  one 
hundred  years  into  our  culinary  and  dietetic  life  to  act 
as  a  sort  of  binding  material  on  which  our  cuisine  so 
largely  revolves, " 2  became  acute  shortly  after  the  United 
States  entered  the  world  conflict.  The  formation  of  a 
public  commission  to  attempt  solution  of  this  problem 
was  foreshadowed  by  Herbert  C.  Hoover  a  year  before 
the  severe  logic  of  sheer  economic  pressure  compelled 
the  actual  creation  of  such  a  body.  Appearing  before 
the  Senate  Committee  on  Agriculture  and  Forestry  on 
June  19,  1917,  to  testify  in  behalf  of  the  then  pending 
Food  Control  Bill  (S.  2463),  Mr.  Hoover  made  the 
following  statement : 

"At  the  present  moment  our  sugar  refiners  are  competing 
with  the  allied  sugar  commission  for  the  purchase  of  Cuban 
sugar.  It  must  be  patent  that  if  we  create  a  sugar  commission 
and  if  that  sugar  commission  cooperates  with  the  Allies  and 
the  Cuban  producers  to  take  over  the  Cuban  crop  at  the  fixed 
price,  that  we  can  effect  a  considerable  saving  on  the  present 
inflated  price  of  raw  sugar,  and  we  can  stabilize  the  price  of  sugar 
throughout  the  whole  of  next  year,  because  the  sugar  commission 
should  be  able  to  impose  upon  the  refiners  the  necessity  to  pass 

1  See  Appendix,  Exhibits  27,  28,  and  29,  for  statistics  of  world  production, 
imports  and  exports  of  sugar. 

2  From  Mr.  Hoover's  statement  in  the  Hearing  before  the  Subcommittee  of  the 
Committee  on  Manufactures,  U.  S.  Senate,  Jan.  2,  1918  (p.  577). 


viii  INTRODUCTION 

the  savings  made  on  raw  sugar  through  to  the  consumers.  As 
there  would  be  a  dominating  amount  of  imported  raw  sugar,  it 
should  be  possible  to  maintain  a  stable  price  throughout  the 
next  year ;  there  would  thus  be  no  incentive  to  speculation,  and 
the  savings  to  the  public  on  its  sugar  should  reasonably  amount 
to  20  to  25  per  cent. 

"There  can  be  no  loss  in  such  an  operation,  because  one  half 
of  the  American  sugar  supply  would  be  in  the  hands  of  the  Sugar 
Commission,  and  the  Sugar  Commission  should  be  able  to  make 
a  price  to  cover  the  whole  of  its  outlay.  In  this  matter,  like  that 
of  wheat,  we  require  a  certain  margin  of  cash  with  which  to  pro- 
vide for  bank  credits.  .  .  . 

"In  order  to  carry  out  such  operation  as  this  we  must  have 
the  operation  of  section  3  in  the  bill  for  voluntary  agreements; 
we  must  have  section  5,  by  which  we  can  impose  a  license  on 
refiners  and  elevators  in  such  a  manner  that  they  play  their  part 
in  this  teamwork ;  we  must  have  the  use  of  section  9,  giving  the 
power  to  buy  and  sell,  and  section  19,  to  finance  the  trade." 

Congress  did  not  see  fit,  however,  to  comply  with  all 
of  Mr.  Hoover's  recommendations  and  the  Food  Con- 
trol Act,  as  finally  enacted,  did  not  give  the  Food  Ad- 
ministration the  authority  to  fix  sugar  prices  directly 
or  to  make  purchases  of  raw  sugar,  as  had  been  done 
abroad.  Consequently  it  was  necessary  to  depend  on 
the  voluntary  cooperation  of  the  various  branches  of 
the  sugar  trade.  A  Sugar  Division,  under  the  efficient 
direction  of  Mr.  George  M.  Rolph,  was  created  within 
the  Food  Administration,  and  the  entire  sugar  industry 
was  mobilized  to  meet  the  impending  war  exigencies. 
Agreements  were  effected  with  the  domestic  beet-sugar 
producers,  the  Louisiana  cane-sugar  producers,  and  the 
cane-sugar  refiners,  relative  to  the  prices  and  distribution 
of  1917-18  crops,  and  the  entire  Cuban  crop  of  that  year 
was  purchased  by  the  International  Sugar  Committee, 
which  acted  in  behalf  of  the  United  States  and  the  Allied 
Governments.  This  first  period  of  Government  control 
of  the  industry  continued  to  July  i,  1918. 

Early  in  1918,  it  became  apparent  that  the  problems 
relating  to  sugar  could  no  longer  be  effectively  solved 
through  these  separate  voluntary  agreements  with  the 


INTRODUCTION  EC 

different  branches  of  the  trade  and  through  the  existing 
executive  machinery  of  the  Food  Administration.  For 
there  were  two  sets  of  problems  facing  the  Food  Adminis- 
tration hi  1918,  the  first  concerned  with  the  proper 
prices  for  the  1918-19  crops  in  the  various  sources  of 
supply,  the  second  concerned  with  supply  and  distribu- 
tion. In  its  attempt  to  solve  these  problems,  the  Food 
Administration  was  ultimately  forced  to  create  the 
United  States  Sugar  Equalization  Board,  a  commission 
such  as  Mr.  Hoover  had  described  before  the  Senate 
Committee  on  Agriculture  and  Forestry,  hi  June,  1917. 

The  entire  plan  of  control  by  the  Sugar  Board  had 
been  predicated  upon  the  continuance  of  the  war  with 
the  Central  Powers.  In  regard  to  its  probable  duration, 
the  attitude  of  the  American  people  at  the  time  when 
the  Sugar  Board  began  to  function  fully,  that  is  in  the  fall 
of  1918,  is  perhaps  best  expressed  in  the  following 
quotation  from  Mr.  Hoover's  statement  of  Sept.  20, 
1918. 

"There  is  no  prospect  of  a  proper  ending  of  the  war  before  the 
campaign  of  the  summer  of  1919.  To  attain  victory  we  must 
place  in  France  three-and-a-half  million  fighting  men,  with  the 
greatest  mechanical  equipment  that  has  ever  been  given  to  any 
army.  While  we  expect  the  position  of  the  Western  front  may 
be  improved,  from  a  military  point  of  view,  between  now  and 
then,  there  can  be  no  hope  for  a  consummation  of  the  end  that 
we  must  secure,  until  another  year  has  gone  by. 

"If  we  are  to  accomplish  this  end  in  1919  we  will  save  a  million 
American  lives  that  will  be  expended  if  we  have  to  continue  until 
1920." 

If  in  the  summer  of  1918  or  in  the  early  fall,  there  had 
been  any  evidence  that  the  collapse  of  the  Central 
Powers  was  imminent,  the  Sugar  Board  would  perhaps 
never  have  been  created  or  would  probably  have  been 
dissolved  shortly  after  creation;  but  with  the  pro- 
longation of  the  war  for  at  least  another  year  generally 
assumed,  the  Board  entered  into  various  contracts  both 
with  domestic  and  foreign  producers  to  insure  adequate 


X  INTRODUCTION 

supplies  for  the  year  1919  and  assumed  control  of  the 
intricate  scheme  of  "certificate"  distribution,  which 
had  been  organized  by  the  Food  Administration  previ- 
ously. Consequently,  the  abrupt  termination  of  the 
war  found  the  United  States  Sugar  Equalization  Board 
bound  by  several  contracts,  for  the  execution  of  which 
a  continuance  of  the  corporation  was  essential  during 
' 


Convenient  alike  to  the  writer  seeking  facility  of 
arrangement  and  to  the  reader  desiring  clarity  of  ex- 
position, the  Board's  labors  can  best  be  described  in  two 
divisions,  the  war  work  and  the  reconstruction  work. 
Inasmuch,  however,  as  its  activities  were  pyramided 
on  the  rather  substantial  base  erected  previously  by  the 
Sugar  Division  of  the  Food  Administration,  a  brief 
account  of  this  earlier  period  of  Government  control  of 
the  sugar  industry  must  of  necessity  be  prefixed  to  a 
history  of  the  United  States  Sugar  Equalization  Board. 
Such  a  resume  is  presented  in  the  first  chapter. 

Chapters  two  and  four  originally  appeared  in  sub- 
stantially the  present  form  in  the  August,  1919,  number 
of  the  Quarterly  Journal  of  Economics,  published  by 
Harvard  University.  The  author  is  indebted  to  the 
editor,  F.  W.  Taussig,  for  permission  to  reprint  this 
material  in  this  volume.  Acknowledgment  is  made  of 
the  constructive  criticism  and  suggestions  of  the  Direc- 
tors of  the  Board  and  the  careful  proofreading  and 
checking  of  the  manuscript  by  Mr.  Howard  M.  Ballou 
of  the  Statistical  Department. 

JOSHUA  BERNHARDT. 

UNITED  STATES  SUGAR  EQUALIZATION  BOARD,  INC. 

NEW  YORK  CITY. 

June,  1920. 


PART  I 
THE  WAR  PERIOD 


CHAPTER  I 


THE   "MOBILIZATION"  OF  THE  SUGAR  INDUSTRY 

BY    THE    SUGAR    DIVISION    OF    THE 

FOOD  ADMINISTRATION 

IN  reviewing  the  activities  of  the  Food  Adminis- 
tration in  its  control  of  the  sugar  industry,  it  is  im- 
portant to  bear  in  mind  that  the  primary  problem  was 
not  one  of  sugar  but  of  shipping  tonnage.  There  would 
have  been  in  all  probability  a  sufficient  supply  of  sugar 
for  all  the  Allies  throughout  the  war,  had  ships  been 
available  to  bring  sugar  from  distant  sources  of  supply. 
To  what  extent  the  sugar  requirements  of  three  of  the 
Allies,  the  United  States,  Canada,  and  the  United  King- 
dom, had  been  met  by  imports  in  prewar  years  is  demon- 
strated in  the  following  table : 

IMPORTS  AND  CONSUMPTION  OF  THE  UNITED  STATES,  THE 
UNITED  KINGDOM,  AND  CANADA1 

(Quantities  in  Short  Tons) 


COUNTRY 

PREWAR 
AVERAGE  ANNUAL 
CONSUMPTION 

PREWAR 
AVERAGE  ANNUAL 
NET  IMPORTS 

PREWAR 
AVERAGE  ANNUAL 
DOMESTIC 
PRODUCTION 

United  Kingdom  .     . 
United  States  .     .     . 
Canada    

2,057,000 
3,798,000 
289,000 
6,144,000 

2,031,000 
2,916,000 
276,000 
5,223,000 

Negligible 

875,000 
13,000 

888,000 

Total    .... 

1  Since  the  figures  given  in  this  book  are  nearly  all  taken  from  the  files  of 
the  Food  Administration  and  the  Sugar  Board,  no  references  will  be  given  for 
individual  tables. 


4        GOVERNMENT  CONTROL  OF  SUGAR 

Thus  out  of  a  total  annual  requirement  for  these  three 
countries  combined  of  6,144,000  tons,  5,223,000  tons, 
or  85  per  cent,  were  transported  in  ships.  In  face  of  the 
scarcity  of  shipping  brought  about  by  the  war,  the  utiliza- 
tion of  this  much  tonnage  for  a  purpose  not  directly  for 
military  ends  was,  in  itself,  a  problem  of  considerable 
magnitude.  Although  sugar  was  recognized  as  an 
essential  food  and  the  curtailment  of  its  use  in  the  house- 
hold deemed  undesirable,1  there  were  so-called  non- 
essential  uses  of  the  commodity  which,  under  pressure 
of  war  conditions,  could  be  dispensed  with,  particularly 
in  countries  like  the  United  States  and  the  United 
Kingdom,  where  the  per  capita  consumptions,  83  pounds 
and  91  pounds  per  annum  respectively,  were  far  beyond 
the  usages  of  most  other  countries  of  the  civilized  world. 

It  is  evident,  therefore,  that  had  there  been  no  other 
problem  than  the  mere  ocean  transportation  of  this  five 
and  a  quarter  millions  of  tons  of  sugar  per  annum,  the 
necessity  would  have  been  obvious  for  diverting  to 
military  ends  as  large  a  portion  of  this  tonnage  as  could 
be  dispensed  with  without  detriment  to  the  physical 
welfare  of  the  population.  The  problem  was  intensi- 
fied, however,  through  the  position  of  the  United  King- 
dom, which  country  had  obtained  the  largest  proportion 
of  its  supplies  before  the  -war  from  the  countries  with 
which  she  was  then  in  a  death  grapple.  The  following 
table  shows  to  what  degree  the  United  Kingdom  was  de- 
pendent upon  the  Central  Powers  for  her  sugar  supply. 

It  can  be  seen  that  54  per  cent  of  the  prewar  sugar 
supply  of  the  United  Kingdom  came  from  the  Cen- 
tral Powers,  and  furthermore,  that  Belgium  and  France, 
whose  beet  fields  were  soon  devastated  by  the  Ger- 
man armies,  furnished  together  about  6  per  cent  of 
the  total.  Thus  60  per  cent  of  the  total  became 
inaccessible  to  the  United  Kingdom  immediately  upon 

1  See  Appendix,  Exhibit  18,  for  memorandum  regarding  importance  of  sugar 
as  a  food  (page  230). 


MOBILIZATION  BY  THE  SUGAR  DIVISION  5 

PREWAR  SUGAR  SUPPLY  OF  THE  UNITED  KINGDOM 


SOURCE  OF  SUPPLY 

PREWAR  AVERAGE 
ANNUAL  AMOUNT 
OBTAINED  FROM 
EACH  SOURCE 
(SHORT  TONS) 

PER  CENT  OF 
TOTAL  SUPPLIED 
BY  EACH  SOURCE 

Germany     

78-?,  171 

38.  q<; 

Austria-Hungary  

3IQ,67I 

1^.73 

Netherlands      

101,67^ 

0-43 

Java   
Cuba  
Brazil      
Peru   
British  West  Indies  

123,400 
142,329 
29,205 

45,404 
3Q,2<3 

6.07 
7.01 

i-44 
2.24 
1.03 

British  Guiana      

2A,I3Q 

1.  10 

Mauritius     

37.O34. 

1.82 

Haiti  and  Dominican  Republic    . 
Belgium  
France     
United  States  

40,464 
77,936 
43,642 
23,l67 

1.99 
3-84 
2.15 
1.  14 

All  other  countries    

in,  1^6 

15.47 

Total    

2,031,624 

100.00 

the  outbreak  of  the  war.  To  make  matters  worse, 
the  Netherlands,  which  had  provided  9.4  per  cent  of  the 
total  prewar  aggregate,  was  soon  out  of  the  question  as  a 
source.  Accordingly,  practically  70  per  cent  of  the 
normal  sugar  supply  of  the  United  Kingdom  was  thus 
completely  wiped  out  of  existence  and  there  was  no 
recourse  except  to  far-away  markets  such  as  Java  and 
Cuba,  the  only  countries  that  had  an  exportable  surplus 
approaching  the  large  requirements  of  the  United  King- 
dom. The  utilization  of  Java  as  a  source  of  supply 
was  found  to  be  a  great  drain  on  tonnage.  It  took 
approximately  150  days  for  a  cargo  ship  proceeding 
at  a  speed  of  200  miles  a  day  to  go  from  England  to  Java 
and  return,  inclusive  of  loading  and  discharging  time 
at  both  terminals,  while  on  the  other  hand,  the  trip 
from  England  to  New  York  or  Cuba  consumed  only 
about  fifty  days.  It  was  inevitable  that  as  the  period 


6        GOVERNMENT  CONTROL  OF  SUGAR 

of  the  war  lengthened,  the  United  Kingdom  should 
turn  in  an  increasing  degree  to  Cuba  for  raw  sugar  and 
to  the  United  States  for  refining  capacity. 

A  condition,  different  in  primary  causes,  but  identical 
in  effect,  developed  in  the  case  of  France  and  Italy. 
That  part  of  France  which  was  devastated  by  the  Ger- 
mans and  bitterly  fought  over  many  times  during  the 
war,  was  the  center  of  the  French  beet  sugar  industry. 
The  sugar  production  of  France  dropped  from  a  prewar 
average  of  752,542  short  tons  to  202,415  short  tons  in  the 
crop  year  of  1916-17,  a  decrease  of  over  one-half  a  million 
tons.  The  withdrawal  of  labor  from  the  fields  and 
factories  owing  to  the  exigencies  of  Italy's  military 
problems  brought  about  a  decline  there  from  a  prewar 
average  production  of  211,050  tons  to  156,800  tons  in 
the  crop  year  of  1916-17.  Both  France  and  Italy  could 
turn  mainly  to  but  two  sources  of  supply,  the  United 
States  and  Cuba,  since  ships  were  not  available  to  be 
sent  to  more  distant  sources. 

In  direct  response  to  this  increasing  demand,  the  com- 
bined production  of  Cuba  and  the  United  States  mounted 
from  a  prewar  annual  average  of  4,441,581  short  tons  to 
5,587,476  short  tons  in  the  crop  year  of  1916-17.  The 
following  table  shows  the  changes  in  sugar  production  for 
Cuba  and  the  United  States,  including  the  non-contigu- 
ous territories,  Porto  Rico  and  Hawaii : 


AVERAGE 
ANNUAL  PREWAR 
PRODUCTION 

1915-16 

1916-17 

United  States 
Louisiana  cane  .     .     . 
Beet  sugar    .... 
Hawaii     ..... 

302,647 
607,672 
^60,424 

(Short  tons) 

137,500 
874,220 
646,000 

303,900 
820,657 
t;g2,763 

Porto  Rico  .... 
Cuba  

365,838 
2,596,000 

346,490 
2,967,427 

483,590 
3,386,566 

Total    

I.'MT.'^T 

4,071,637 

5,587,476 

MOBILIZATION  BY  THE  SUGAR  DIVISION  7 

Cuba's  production,  it  will  be  noted,  increased  almost 
phenomenally  in  the  period  under  consideration,  while 
significant  increases  were  attained  by  the  other  localities, 
with  the  exception  of  Louisiana.  Unfortunately  this 
increased  production  was  offset  by  higher  consumption 
hi  the  United  States1  which  attained  a  level  in  1917 
that  exceeded  the  prewar  average  by  about  300,000  tons, 
so  that  the  net  surplus  available  for  Europe  was  only 
800,000  tons  above  the  prewar  average.  But  England  in 
the  prewar  period  had  obtained  annually  about  1,100,000 
tons  from  the  Central  Powers  alone,  apart  from  the 
300,000  tons  from  Belgium,  France,  and  the  Netherlands, 
so  that  the  increased  production  of  the  United  States 
and  Cuba  was  only  partially  compensatory  for  the  deficit 
of  the  United  Kingdom  alone.  In  addition,  it  must  not 
be  forgotten  that  France  and  Italy  also  required  sugar 
from  the  Western  Hemisphere.  Thus  the  Allies  were 
confronted  with  this  dilemma,  either  to  use  valuable 
shipping  tonnage  to  bring  sugar  from  far-away  places 
such  as  Java  or  further  to  reduce  consumption  in  all 
allied  countries  through  drastic  rationing  of  both  the 
sugar-using  industries  and  the  housewives.  Up  to  the 
time  when  the  United  States  entered  the  World  War, 
the  efforts  of  the  Allied  Governments  to  meet  the  above 
problems  had  not  been  sufficiently  successful  to  prevent  a 
demand  upon  the  Western  Hemisphere  in  excess  of  the 
supply.  As  a  normal  sequence  of  the  competitive 
bidding  for  the  inadequate  Cuban  supplies  by  the  re- 
fineries of  the  United  States  and  the  British  Royal  Com- 
mission on  the  Sugar  Supply,  which  body  was  acting 

1  The  figures  by  years  are  as  follows : 

YEAR  U.  S.  CONSUMPTION 

(Short  tons) 
Prewar  average  for  1000-13  3,798,000 

1914  4,212,000 

1915  4,258,000 

1916  4,098,000 

1917  4,122,000 


8 


GOVERNMENT  CONTROL  OF  SUGAR 


on  behalf  of  Great  Britain,  France,  and  Italy,  the  price 
for  Cuban  centrifugals  was  bound  to  advance  rapidly. 

There  were  two  important  circumstances  in  1917 
which  materially  hastened  this  rise  in  price;  the  first 
was  the  insurrection  in  Cuba,  which  caused  a  material 
reduction  in  the  crop  and  reduced  the  anticipated  supplies 
for  the  United  States  in  proportion ;  the  second  was  the 
agitation  in  Congress  for  the  repeal  of  the  "drawback" 
on  sugar,  which  caused  foreign  buyers  to  purchase  more 
heavily  in  Cuba,  in  anticipation  of  a  probable  price  in- 
crease. Thus  the  duty-paid,  net  cash  price  for  96° 
raw  centrifugal  sugar  at  New  York  increased  steadily, 
with  hardly  a  drop,  from  $5.89  per  hundred  pounds  on 
June  i,  1917  to  $7.52  per  hundred  pounds  on  August  7, 
1917.  A  comparison  with  other  years  shows  the  relative 
rapidity  of  this  increase  for  these  few  months  of  1917: 

TABLE  SHOWING  CHANGES  IN  PRICE  OF  RAW  SUGAR  FOR  THE 
YEARS  1913  THROUGH  1917,  FROM  JUNE  i  TO  AUGUST  7 

(Prices  in  cents  per  pound,  duty-paid  at  New  York) 


1913 

1914 

1915 

1916 

1917 

June  i       .... 

3-33 

3.38 

4-95 

6-33 

5.89 

July  i       .... 

348 

3-32 

4-95 

6.40 

6.52 

Aug.  i      .... 

3.65 

3-45 

4.64 

6.21 

7-02 

Aug.  7      .... 

3-73 

4.26 

4-39 

5-75 

7-52 

The  impact  of  the  above  noted  factors  upon  the  re- 
lation between  supplies  and  requirements  for  the  year 
was  no  less  striking  than  the  effect  on  prices.  The  de- 
mand was  artificially  augmented  during  the  first  half  of 
the  year,  so  that  the  deliveries  for  consumption  from 
the  refineries,  beet-sugar  factories,  and  Louisiana  planta- 
tions were  greater  than  any  previous  half  year,  being 
(according  to  Willett  &  Gray's  figures)  2,366,542  long 


MOBILIZATION  BY  THE  SUGAR  DIVISION  9 

tons  as  against  2,137,733  tons  in  the  first  half  of  1916, 
an  increase  of  10.7  per  cent.  By  the  middle  of  the  year 
it  became  obvious  that  unless  there  was  to  be  a  distinct 
slackening  in  the  demand,  a  severe  shortage  was  impend- 
ing, particularly  in  the  Eastern  States,  where  no  new 
crop  sugars  could  be  available  before  the  end  of  the  year. 

From  the  foregoing,  it  becomes  evident  that  there 
were  six  distinct  problems  relative  to  sugar  facing  the 
United  States  Food  Administrator  upon  his  assuming 
office  on  August  10,  1917.  First  of  all,  it  was  impera- 
tive to  reduce  the  quickly  mounting  price  of  an  es- 
sential food  commodity  in  order,  to  prevent  hardships 
on  those  sections  of  the  community  not  able  to  bear 
them.  Secondly,  there  was  the  immediate  problem  of 
alleviating  the  temporary  sugar  shortage,  which,  ac- 
cording to  all  statistical  evidence,  was  bound  to  take 
place  in  the  Eastern  States  in  the  last  quarter  of  the 
year.  Thirdly,  some  form  of  cooperation  with  the  Allies 
was  imperative  so  that  there  would  be  no  further  compe- 
tition among  them  in  securing  sugar  supplies.  The 
soaring  prices  which  must  of  necessity  rule  if  the  law  of 
supply  and  demand  were  to  be  allowed  full  play  would 
thus  be  eliminated.  Such  cooperation  was  also  requi- 
site, for  the  duration  of  the  war,  to  conserve  tonnage. 
Fourthly,  it  was  essential  to  obtain  the  cooperation 
of  the  various  branches  of  the  sugar  trade  in  building  up 
centralized  machinery  for  sugar  distribution  and  to  create 
a  general  mobilization  of  the  industry  for  war  purposes. 
Fifthly,  there  was  the  problem  of  stimulating  production 
so  that  the  progressively  increasing  demands  of  the  Allies 
and  the  United  States  could  be  met.  Finally,  pending 
the  successful  outcome  of  action  taken,  aiming  at  "in- 
creased production,  consumption  had  to  be  curtailed 
somehow.  A  review  of  the  manner  in  which  the  Food 
Administrator  attacked  these  problems  will  be  in- 
structive. 


10       GOVERNMENT  CONTROL  OF  SUGAR 

The  Price  Problem 

The  Food  Control  Act  went  into  effect  on  August  10, 
1917,  and  Mr.  Herbert  Hoover  was  appointed  Food 
Administrator  on  that  date.  He  had  already  been 
working  on  various  food  problems  since  May  19,  on  which 
date  he  had  been  appointed  by  the  President  to  act  as 
temporary  food  administrator.  On  August  15,  Mr. 
Hoover  appointed  Mr.  George  M.  Rolph  chief  of  the 
Sugar  Division  of  the  United  States  Food  Administration. 
The  first  step  in  the  campaign  to  reduce  sugar  prices 
was  the  suspension  of  all  trading  in  sugar  futures  on  the 
New  York  Coffee  and  Sugar  Exchange.  The  second 
step  was  the  extension  of  the  export  control  of  the  War 
Trade  Board  to  include  sugar,  so  that  the  sugar  export 
trade  with  all  but  allied  countries  was  discontinued. 
The  Food  Control  Bill  contained  no  provision  for  price 
fixing  of  sugar  and  this  fact,  of  course,  made  the  price 
problem  doubly  difficult  to  solve.  It  was  necessary  to 
depend  upon  voluntary  cooperation  by  way  of  patriotic 
appeal  to  the  various  branches  of  the  trade ;  the  cane- 
sugar  producers  of  Louisiana,  the  sugar-beet  farmers, 
the  beet-sugar  manufacturers,  the  Hawaiian  and  the 
Porto  Rican  producers,  the  cane  refiners,  and  the  Cuban 
producers. 

The  question  then  arose  as  to  the  legality  of  voluntary 
agreements  with  the  various  producers,  which  might  be 
construed  as  "in  restraint  of  trade."  On  August  22, 
1917,  Mr.  Hoover  wrote  the  following  memorandum  to 
the  President,  outlining  the  problem : 

We  are  squarely  up  against  the  determination  of  a  matter 
of  policy  that  I  feel  is  of  so  much  intrinsic  importance  that  I 
have  no  right  to  act  without  your  approval.  I  attach  hereto  an 
application  to  the  Attorney  General  for  an  opinion,  which  needs 
your  approval. 

In  very  bold  terms,  it  is  simply  the  creation  by  the  Food  Ad- 
ministration, representing  yourself,  of  a  combination  in  restraint 
of  trade  to  reduce  prices.  The  operations  are  of  varying  degree 


MOBILIZATION  BY  THE  SUGAR  DIVISION  n 

of  such  combination,  the  clearest  case  being  in  the  matter  of 
beet  sugar. 

Certain  Cuban  sugar  producers  (who  are  out  of  our  reach) 
have  combined  to  force  up  the  price  of  the  remaining  1917  Cuban 
crop,  prior  to  the  new  crop  in  December,  and  have  lifted  the  price 
of  raw  sugar  in  New  York  from  5.9  cents  in  June  to  7.5  cents, 
duty  paid,  on  August  i6th,  and  this  against  a  3 -year  prewar 
average  of  4.2  cents.  The  recent  advance  of  1.6  cents  alone  would 
represent  an  added  tax  upon  the  American  people  of  over  $30,- 
000,000  by  the  end  of  December. 

During  the  period  of  September-January,  our  beet  crop  of 
about  850,000  tons  comes  into  the  market.  We  have  had  a  num- 
ber of  conferences  with  representatives  of  the  principal  beet- 
sugar  concerns  and  they  are  disposed  to  agree  to  fix  a  price  compar- 
able with  Cuban  raws  at  New  York  of  6  cents.  This  would  indi- 
cate a  saving  to  the  consumer  of  1.15  cents,  or  over  $23,000,000 
before  the  new  Cuban  crop  is  available.  We  will  need  to  take 
measures  to  control  the  latter,  later  in  the  year. 

Our  power  in  the  Food  Bill,  so  far  as  sugar  is  concerned,  ex- 
tends only  to  a  control  of  exorbitant  profits  and  wasteful  practices. 
The  beet-sugar  industry,  however,  varies  in  its  cost  of  production 
from  2.6  cents  per  pound  to  4.5  cents  per  pound.  If  we  simply 
limit  the  amount  of  profits,  we  will  have  produced  a  different 
price  of  sugar  from  every  factory  in  the  country,  and  have  thrown 
utter  confusion  in  the  entire  sugar  trade.  The  consumer  will 
have  no  benefit,  because  if  a  retail  groceryman  buys  part  of  his 
sugar  at  one  price  and  part  at  another,  we  can  be  assured  that  he 
will  maintain  the  top  price. 

The  only  hope  is  to  get  all  of  the  beet  sugar  marketed  at  a 
given  price,  and  for  us  to  put  restrictions  on  the  wholesaler  and 
to  seek  for  restrictions  on  the  retailer  by  virtue  of  publicity  as 
to  the  real  price  of  sugar. 

The  alternative  is  to  agree  with  the  beet-sugar  producers  as 
to  a  price  at  which  they  will  sell  their  sugar,  and  to  ask  them  to 
pool  the  entire  sugar  and  the  cost  of  distribution  among  them- 
selves, so  that  factories  situated  advantageously,  from  a  trans- 
port point  of  view,  will  not  be  making  a  different  price  from  those 
at  a  longer  distance.  This  requires  an  inter-agreement  between 
the  different  factories,  and  is,  in  fact,  a  combination. 

The  same  situation  will  also  apply  to  the  cane-sugar  refiners. 
We  have  given  days  of  earnest  discussion  to  various  methods  by 
which  we  could  effect  this  by  direct  action  from  the  Food  Adminis- 
tration to  each  producer,  and  we  are  compelled  to  abandon  it  as 
hopeless  from  a  commercial  point  of  view.  Therefore,  the  problem 
becomes  one  simply  as  to  whether  or  not  the  Sherman  Act  is  to  be 


12        GOVERNMENT  CONTROL  OF  SUGAR 

construed  as  a  restriction  on  combination  with  a  view  to  a  reduc- 
tion in  price,  and,  furthermore,  in  considering  this  problem,  we 
cannot  lose  sight  of  the  possible  effects  on  having  created  such 
combinations  in  their  after- war  complexion. 

We  would  have  been  able  to  solve  this  entire  problem,  had  it 
not  been  that  the  Senate  struck  out  of  the  Food  Bill  the  right 
of  the  Government  to  buy  and  sell  sugar,  and  limited  the  control 
to  profits  and  not  prices.  It  would  have  been  a  comparatively 
simple  operation  for  us  to  have  bought  the  sugar  from  each  in- 
dividual producer  at  a  fair  price,  and  to  have  undertaken  the 
distribution  ourselves  by  the  use  of  the  usual  distributing  ma- 
chinery in  the  sugar  trade. 

Subsequently,  in  response  to  the  above,  the  Attorney 
General  gave  the  opinion  that  such  contracts  with  the 
Government  as  mentioned  above  were  not  in  contra- 
vention of  the  Sherman  Act.  Some  preliminary  nego- 
tiations were  then  entered  into  with  beet-sugar  producers 
representing  80  per  cent  of  the  whole  industry.  These 
negotiations  were  conducted  during  the  week  ending 
August  26,  1917,  and  a  tentative  agreement  was  reached 
to  reduce  the  high  price  then  prevailing  by  i-j  cents. 
Later  all  the  other  producers  joined  in  the  arrangement, 
the  basic  price  agreed  upon  being  $7.25  per  hundred 
pounds,  cane  basis,  seaboard  refining  points.1  An  agree- 
ment was  reached  with  the  Louisiana  producers,  limiting 
the  price  for  Louisiana  plantation  granulated  sugars  to 
$7.80  per  hundred  pounds  and  $7.25  for  clarified  sugar. 
A  further  measure,  looking  towards  a  decrease  in  price, 
was  the  request  made  of  the  refiners,  that  they  refuse  to 
pay  more  than  $6.90  per  hundred  pounds  for  raw  sugar, 
duty  paid  at  New  York.  A  refiners'  margin  of  $1.30 
per  hundred  pounds  was  agreed  upon  after  investigation 
of  prewar  and  war  costs  of  refining. 

As  a  result  of  all  these  agreements  and  measures  and 
other  arrangements  made  in  connection  with  the  pur- 
chase of  the  Cuban  1917-18  crop,  which  are  explained 

1  This  basic  price  was  changed  to  $7.35  on  December  12  and  to  $7.45  OB 
January  8,  changes  made  essential  by  the  agreement  arranged  with  the  Cuban 
producers. 


MOBILIZATION  BY  THE  SUGAR   DIVISION  13 

below  in  another  section,  the  price  of  raw  sugar  at  New 
York  decreased  from  $7.52  per  hundred  pounds  on 
August  7  to  $6.72  on  November  30,  1917,  and  then 
dropped  further  to  $6.005  on  December  17,  at  which 
date  the  Cuban  price  was  finally  fixed  by  direct  purchase 
of  the  whole  1917-18  crop  by  the  International  Sugar 
Committee. 

The  weekly  fluctuations  in  prices  from  August  7 
to  the  end  of  the  year  were  as  follows : 

NET  CASH  DUTV-PAID  PRICES 

DATE  OF  RAWS  AT  NEW  YORK 

(Cents  per  Ib.) 

Aug.  7  7.52 

Aug.  16  7.40 

Aug.  22  7.46 

Aug.  23  7.40 

Aug.  29  7.02 

Sept.  14  6.90 

Sept.  24  7.02 

Sept.  27  6.90 

Nov.  30  6.72 

Dec.  17  6.005  - 

In  order  that  all  the  efforts  of  the  Food  Administra- 
tion in  stabilizing  the  price  of  sugar  might  not  be  nullified 
by  activity  of  the  wholesale  and  retail  trade  in  an  oppo- 
site direction,  regulations  were  issued  limiting  profits  of 
wholesalers  and  dealers,  and  an  intensified  and  widely 
diffused  propaganda  informed  the  general  public  what  the 
maximum  retail  price  for  sugar  should  be.  The  retail 
price  of  refined  sugar  was  reduced  by  activity  in  all  these 
directions  from  i£  to  2  cents  a  pound  in  the  territory 
north  of  the  Ohio  and  west  of  the  Mississippi,  and  about 
i  cent  a  pound  in  the  South  and  the  Atlantic  Seaboard 
States.  Since  the  consumption  of  sugar  in  the  United 
States  in  the  four  months  September  through  December, 
1917,  amounted  to  about  990,000  short  tons  or 
1,980,000,000  pounds,  it  is  clear  that  a  large  amount 
was  thus  saved  to  the  American  people.  For  every 


14  GOVERNMENT  CONTROL  OF  SUGAR 

cant  of  increase  in  the  price  of  sugar  meant  a  loss  to  the 
consuming  public  of  $19,800,000,  and  conversely,  for 
every  decrease  of  a  cent,  the  consuming  public  saved 
a  like  amount. 

Alleviation  of  Conditions  in  the  Eastern  States  in  the  Last 
Quarter  of  1917 

Statistical  evidence  had  been  accumulating  for  some 
time  before  the  Food  Administration  was  created, 
that  a  shortage  in  sugar  was  imminent  before  the  end  of 
the  year.  Accordingly,  various  measures  were  taken 
shortly  after  the  Food  Administration  came  into  exist- 
ence, which  would  tend  to  improve  matters,  but  there 
was  not  sufficient  time  ahead  nor  sufficient  legal  power 
to  alleviate  shortage  conditions  entirely. 

The  first  measure  taken  was  the  imposition  of  an 
embargo,  on  August  27,  1917,  on  sugar  exports  from 
the  United  States  to  all  destinations  except  the  allied 
nations.  Furthermore,  cooperation  was  secured  of 
the  Cuban  Government,  which  placed  an  embargo  on 
sugar  exports  from  Cuba  to  all  countries  except  the 
United  States  and  the  Allies,  on  October  i,  1917.  The 
second  measure  was  an  appeal  to  the  American  people 
to  reduce  their  consumption  of  sugar  both  by  decreasing 
its  domestic  use  and  by  eating  less  candy  and  other 
articles  in  which  sugar  is  used.  A  request  was  also 
made  of  the  sugar-distributing  trade  on  October  25, 1917, 
to  supply  the  confectionery  and  sweet  drink  trade  with 
but  fifty  per  cent  of  their  normal  requirements.  A  cam- 
paign for  increased  fruit  preserving,  however,  neutralized 
efforts  to  conserve  sugar  in  these  directions,  but  this  was 
inevitable,  since  it  was  absolutely  essential  that  as  much 
perishable  fruit  be  conserved  as  possible. 

The  third  measure  was  the  attempt  to  move  a  maxi- 
mum amount  of  beet  sugar,  then  being  manufactured 
in  large  quantities,  from  producing  centers  to  the  other 


MOBILIZATION  BY  THE  SUGAR  DIVISION  15 

parts  of  the  country,  particularly  to  the  Northeastern 
States.  Unusually  severe  weather  and  bad  transporta- 
tion conditions  balked  the  efforts  of  the  Food  Adminis- 
tration in  this  connection  to  a  large  extent.  At  one 
time  140  cars  of  beet  sugar  destined  for  the  Northeast 
were  held  up  owing  to  a  transportation  blockade.  In 
spite  of  these  discouragements,  however,  393,475  tons, 
or  51.9  per  cent  of  the  total  beet-sugar  crop  of  1917-18, 
were  sold  before  January  i,  1918,  as  against  a  prewar 
average  of  about  29  per  cent.  This  rapid  movement  of 
the  crop  and  its  wide  distribution  was  due  in  large 
measure  to  the  efficiency  of  the  Beet  Sugar  Distributing 
Committee  at  Chicago,  which  was  the  central  organiza- 
tion created  by  the  Food  Administration  under  the 
terms  of  the  agreement  with  the  producers  to  distribute 
the  1917-18  crop.  The  Food  Administration,  as  a 
further  effort  to  obtain  sugar  for  Northeastern  States, 
released  about  30,000  tons  of  sugar  destined  for  shipment 
to  France  and  Russia,  for  distribution  in  the  section 
of  the  country  where  the  shortage  was  worst. 

It  is  important  to  emphasize  again  that  the  problem 
in  the  last  analysis  was  one  of  shipping.  For  there  was 
at  this  time  sufficient  sugar  in  Java  for  all  needs,  and 
the  Food  Administration  endeavored  to  obtain  shipping 
to  send  there,  but  the  Shipping  Board  could  not  allow 
ships  for  this  purpose,  nor  could  foreign  shipping  be 
secured.  It  was  obviously  detrimental  to  the  war  aims 
of  the  United  States  to  send  ships  on  such  an  errand 
when  there  was  insufficient  tonnage  for  more  essential 
purposes. 

Cooperation  with  the  Allies 

The  efforts  of  the  Food  Administration  to  arrange 
some  form  of  cooperation  with  the  Allies,  resulted 
finally  in  the  creation  of  an  International  Sugar  Com- 
mittee of  five,  of  which  two  members,  Sir  Joseph  White- 
Todd  and  John  Ramsay  Drake,  represented  the  English, 


l6       GOVERNMENT  CONTROL  OF  SUGAR 

French,  and  Italian  governments ;  two  members,  Earl  D. 
Babst  and  Win.  A.  Jamison,  represented  the  American 
Refiners,  and  one  member,  George  M.  Rolph,  repre- 
sented the  United  States  Food  Administration.  The 
duties  of  this  committee  were  three-fold : 

(1)  To  determine  the  most  economical  sources  of  sugar  supply 

from  the  standpoint  of  transport  conditions. 

(2)  To  arrange  for  transport  of  sugar  at  uniform  rates. 

(3)  To  allocate  and  distribute  sugar  between  the  United  States 

and  the  Allies,  subject  to  the  approval  of  the  respective 
governments. 

This  committee  began  negotiations  immediately  with 
the  Cuban  producers,  with  the  intention  of  purchasing 
the  entire  Cuban  crop  for  the  Allied  Governments. 
The  final  agreement l  was  entered  into  on  December  24, 
1917,  after  both  the  Cuban  and  the  American  governments 
had  participated  in  the  negotiations.  The  price  finally 
agreed  upon  was  $4.60  per  hundred  pounds  f.  o.  b. 
northern  Cuban  ports.  Of  the  amount  bought,  one- 
third  was  to  be  sold  to  the  Royal  Commission  on  the 
Sugar  Supply  for  export  to  Europe,  the  remaining  two- 
thirds  to  go  to  the  refineries  of  the  United  States.  As 
it  was  finally  worked  out,  1,076,934  long  tons  went  to 
Europe  and  2,153,869  long  tons  to  the  United  States, 
thus  representing  a  transaction  of  3,230,803  long  tons, 
having  a  value  of  $330,000,000.  Executive  machinery 
was  provided  for  the  allocation  of  the  sugar  to  the 
American  refineries,  for  the  shipment  of  this  large 
amount  of  sugar  to  the  different  countries,  and  for 
handling  all  the  necessary  details  involved  in  a  transac- 
tion of  such  magnitude. 

Mobilization  of  the  Various  Branches  of  the  Sugar  Trade 

As  noted  above,  Mr.  Hoover  appointed  Mr.  George  M. 
Rolph  chief  of  the  Sugar  Division  of  the  Food  Adminis- 

1  See  Appendix,  Exhibit  i,  page  136,  for  this  agreement  printed  in  full. 


'  MOBILIZATION  BY  THE  SUGAR  DIVISION  17 

tration  on  August  15,  1917,  five  days  after  the  Food 
Control  Act  became  effective.  Mr.  Rolph  had  been 
general  manager  of  the  California  and  Hawaiian  Sugar 
Refining  Company  for  the  twelve  years  preceding.  He 
had  been  surveying  the  field  of  possible  war-time  control 
of  the  sugar  industry  since  the  end  of  June,  1917,  at 
which  time  he  had  been  summoned  to  Washington  by 
Mr.  Hoover  to  discuss  the  matter.  By  the  time  the 
Food  Control  Act  became  law,  an  executive  department 
to  deal  with  sugar  problems  was  already  hi  existence  as 
a  constituent  entity  of  the  Food  Administration  or- 
ganization, designated  as  the  Sugar  Division. 

The  mobilization  of  the  various  branches  of  the  sugar 
industry  proceeded  along  with  the  activities  relating 
to  sugar  price  control.  Following  preliminary  confer- 
ences with  representatives  of  the  beet-sugar  producers 
in  the  last  week  of  August  and  the  first  few  weeks 
of  September,  the  Food  Administration  announced  on 
September  17,  1917,  that  plans  had  been  formulated 
for  the  creation  of  a  central  distributing  agency  for  all 
beet  sugar  produced  in  the  United  States.  Such  an 
agency,  working  under  the  direction  of  the  Food  Ad- 
ministration, was  imperative  during  the  war  in  order 
that  the  available  supplies  might  be  allotted  equitably 
and  with  the  greatest  geographical  efficiency,  thus  al- 
lowing greater  utilization  of  the  railroad  facilities  for 
military  purposes.  On  September  20,  1917,  the  Food 
Administration  announced  that  the  contract  between 
the  Government  and  the  beet-sugar  producers  had  been 
signed  by  all  the  producers.  This  contract  *  provided 
for  a  maximum  price  of  $7.25  per  zoo  pounds  (cane 
basis  seaboard  refining  points)  for  all  beet  sugar  of  the 
1917-18  crop,  unless  increased  by  order  of  the  Food 
Administrator  later  in  the  crop  year  in  order  to  adjust 
the  beet  price  to  the  price  of  refined  sugar  made  from 

1  See  Appendix,  Exhibit  5,  for  text  of  this  agreement  (page  155). 
c 


l8       GOVERNMENT  CONTROL  OF  SUGAR 

foreign  cane.  Further,  every  producer  who  signed  the 
contract  agreed  to  ship  sugar  only  to  such  localities 
and  in  such  amounts  as  the  Food  Administrator,  acting 
through  the  Sugar  Distributing  Committee,  might  direct. 
The  Food  Administrator  agreed  to  direct  the  distribu- 
tion of  the  crop  in  "the  most  economical  and  efficient 
method  consistent  with  an  equitable  distribution." 
Provision  was  made  for  the  pooling  of  all  freight  charges 
and  distribution  expenses  so  that  each  producer  re- 
ceived an  " average  net  proceeds"  per  pound  of  his 
sugar. 

The  seven  men1  named  in  the  contract  to  act  as 
the  Food  Administration  Sugar  Distributing  Committee 
met  in  New  York  City  on  September  21,  1917,  and 
proceeded  with  their  work  of  organization.  Formal 
jurisdiction  was  assumed  by  this  body  on  October  i, 
when  the  proclamation  of  President  Wilson,  putting  the 
beet-sugar  industry  under  the  licensing  provisions  of 
the  Food  Control  Law,  became  effective.  The  executive 
offices  of  this  committee  throughout  the  period  of  its 
existence  were  located  in  Chicago. 

While  these  arrangements  were  being  made  with  the 
beet-sugar  producers,  conferences  were  being  held  with 
the  cane-sugar  refiners.  On  September  5,  1917,  the 
Food  Administration  announced  that,  at  a  conference 
with  representatives  of  practically  all  sugar  refiners 
of  the  United  States,  it  had  been  voluntarily  agreed  to 
import  all  foreign  sugars  during  the  war  through  a 
committee  to  be  appointed  by  the  Food  Administrator, 
such  sugars  to  be  distributed  proportionately  to  all 
refineries  operating  in  the  United  States.  The  details 
of  these  arrangements  were  of  necessity  elaborated 
concurrently  with  the  plans  for  the  creation  of  the  inter- 
allied council  which  was  to  purchase  foreign  sugars  for 
the  United  States  and  the  Allies  and  also  the  negotia- 

1 H.  A.  Douglas,  E.  C.  Howe,  W.  H.  Hannam,  S  H.  Love,  W.  L.  Petrikin, 
S.  W.  Sinsheimer,  and  W.  P.  Turner. 


MOBILIZATION  BY  THE  SUGAR  DIVISION  19 

tions  with  the  Cubans  for  the  purchase  of  the  entire 
1917-18  crop. 

The  contract1  as  finally  drawn  up  between  the  re- 
finers and  the  Food  Administrator,  which  was  dated 
October  i,  1917,  provided  for  a  committee  of  five  re- 
finers, designated  as  the  American  Refiners'  Com- 
mittee, to  carry  out  the  provisions  of  the  contract, 
Each  refiner  agreed  not  to  purchase  after  October  i. 
1917,  any  raw  sugar  from  the  West  Indies  and  other 
available  import  sources  except  through  the  Inter- 
national Sugar  Committee.  The  International  Com- 
mittee was  to  "arrange,  route,  and  distribute"  its  pur- 
chases of  raw  sugars  for  the  refiners'  accounts,  acting 
as  far  as  possible  hi  accordance  with  refiners'  con- 
veniences and  requirements.  The  American  Refiners' 
Committee  was  to  arrange  for  a  fair  proportional  allot- 
ment of  the  supplies  to  individual  refiners  and  in  event 
of  friction  the  decision  of  the  Food  Administrator  was 
to  be  final.  Expenses  of  both  the  American  Refiners' 
Committee  and  the  International  Sugar  Committee 
were  to  be  met  by  a  levy  on  the  total  tonnage  handled 
by  the  Committees,  and  the  maximum  margin  for  re- 
fining was  fixed  at  a  differential  of  $1.30  per  100  Ibs. 
f.  o.  b.  refinery  over  the  cost  of  raw  sugars,  assuming 
a  basic  duty-paid  delivered  price  of  raws  of  from  5!  to 
6  cents  per  pound.  The  cargo  export  business  of  the 
refiners  was  placed  under  the  supervision  of  the  Food 
Administrator.  The  period  of  the  effectiveness  of  the 
contract  was  stated  as  "until  the  existing  state  of  war 
between  the  United  States  and  Germany  shall  have 
terminated." 

Through  the  above  contracts  with  the  beet-sugar 
producers  and  the  refiners,  the  Food  Administrator  had 
mobilized  for  war  ends  all  of  the  domestic  sugar  industry 
except  the  Louisiana  producers,  who  supplied  only  about 

1  See  Appendix,  Exhibit  4,  for  text  of  this  contract  (page  149). 


20  GOVERNMENT  CONTROL  OF  SUGAR 

6  per  cent  of  the  annual  consumption  of  the  United 
States.  No  contract,  such  as  was  in  existence  in  the 
following  year,  was  entered  into  between  the  Food 
Administration  and  the  some  160  odd  Louisiana  pro- 
ducers, but  they  were  all  under  the  licensing  provisions 
of  the  Food  Control  Act  and  voluntary  maximum  price 
agreements  were  established  with  them  as  already 
noted  above.  But  at  a  conference  held  in  Washington  on 
October  24,  1917,  a  contract  was  arranged  through  the 
medium  of  the  Food  Administration,  between  the 
American  Sugar  Refining  Company  and  the  repre- 
sentatives of  the  Louisiana  producers,  providing  for  the 
sale  to  the  American  Sugar  Refining  Company  of  100,000 
tons  of  Louisiana  sugar  at  a  price  of  $6.35  for  96°  raw 
sugar  at  New  Orleans.  A  freeze  occurred,  however,  in 
Louisiana  which  reduced  the  crop  seriously,  so  that  only 
about  26,000  tons  were  actually  delivered. 

The  above  machinery  for  control  over  the  producers 
and  refiners  was  supplemented  by  the  various  measures 
adopted  for  control  over  the  distributing  trade :  the 
wholesalers,  jobbers,  and  retailers.  The  activities  of 
the  Food  Administration  in  this  direction  in  control 
of  sugar  were  based  on  policies  and  principles  common 
to  its  control  of  the  distribution  of  all  other  food  com- 
modities and  these  are  now  too  generally  known  to  re- 
quire comment  here. 

Encouragement  of  Production 

Perhaps  the  most  serious  problem  confronting  the 
Food  Administration  in  its  sugar  activities  was  that  of 
encouraging  production  while  yet,  at  the  same  time,  en- 
deavoring to  check  the  upward  tendency  of  prices.  In 
the  words  of  one  critic,  "it  was  proposed  to  reduce 
prices  in  spite  of  the  overwhelming  economic  forces 
which  were  working  always  steadily  and  relentlessly 
toward  their  advance  and  at  the  same  tune  to  stimulate 


MOBILIZATION  BY  THE  SUGAR  DIVISION  21 

production.  Nothing  could  be  more  desirable  than  both 
these  purposes,  but  there  was  much  doubt  in  the  minds 
of  those  who  reflected  upon  these  subjects  whether 
such  an  experiment  as  this  could  possibly  succeed."  1 
But  when  Mr.  Hoover  arrived  in  Washington,  May  3, 
1917,  to  advise  the  Council  of  National  Defense  on 
questions  of  food  supply  and  control,  he  found  the  first 
serious  threat  to  sugar  production,  not  in  any  con- 
templated price  control,  but  hi  the  political  disturbances 
in  Cuba.  At  the  request  of  the  Department  of  State, 
he  investigated  the  situation,  so  that  action  might  be 
taken  by  the  United  States  Government  to  aid  in  preserv- 
ing order  in  Cuba.  Subsequently,  an  agent  of  the 
American  Government  was  sent  to  the  island  to  co- 
operate generally  with  the  Cuban  Government  in  any 
measures  which  would  be  necessary  to  protect  the  sugar 
supplies  of  the  United  States.  The  final  outcome  was 
a  decline  in  the  Cuban  crop  of  nearly  400,000  tons,  al- 
though it  was  feared  when  the  revolutionary  disorders 
were  at  their  peak,  that  the  crop  would  be  reduced  by 
almost  a  miUion  tons.  After  this  initial  disturbance 
in  Cuba,  no  similar  peril  developed  hi  any  of  the  principal 
sources  of  the  American  sugar  supply  during  the  war, 
but  the  Food  Administration  was  confronted  with  the 
much  more  delicate  and  troublesome  question  of  agree- 
ing upon  prices  with  the  producers  which  would  stimu- 
late production.  The  problem  would  not  have  assumed 
such  complexity  if  the  entire  sugar  supply  of  the  United 
States  had  originated  in  one  or  two  localities.  But  of 
the  total  annual  sugar  consumption  of  the  United  States 
in  prewar  years,  49.8  per  cent  was  shipped  from  Cuba, 
13.66  per  cent  from  Hawaii,  8.01  per  cent  from  Porto 
Rico,  6.27  per  cent  came  from  Louisiana,  15.97  per  cent 
from  the  domestic  beet-sugar  crop,  and  the  balance, 
about  7  per  cent,  from  miscellaneous  foreign  sources 

1  Speech  of  Senator  Henry  Cabot  Lodge  in  the  Senate,  February  27,  igi8, 
on  the  shortage  of  sugar. 


22       GOVERNMENT  CONTROL  OF  SUGAR 

and  the  Philippines.  Each  of  these  regions  differed 
in  average  costs  of  production,  and  reliable  statistics 
of  costs  in  most  of  these  regions  were  meager  and  un- 
satisfactory. 

It  was  clear,  however,  that  any  significant  increase 
in  sugar  production  for  any  source  but  Cuba  was  out 
of  the  question,  both  for  agricultural  and  economic 
considerations.  Relatively  large  price  increases  would 
have  been  required  to  influence  the  production  but 
slightly  in  Porto  Rico,  Hawaii,  Louisiana,  and  the 
domestic  beet  industry,  while  tremendous  strides  in 
production,  as  the  last  few  years  have  amply  demon- 
strated, could  be  expected  to  result  from  an  almost 
negligible  price  increase  in  Cuba.  In  the  purchase  of 
the  1917-18  crop  "en-bloc"  by  the  International  Sugar 
Committee,  the  price  of  4.60  f.  o.  b.  Cuba,  which  was 
finally  agreed  upon,  after  months  of  conference,  was 
considered  sufficient  by  the  Food  Administration  to 
encourage  production,  although  the  Cuban  repre- 
sentatives requested  5.25  cents.  The  tremendous  in- 
creases in  the  Cuban  crops  which  have  followed  this 
action  are  testimonials  to  the  sound  judgment  displayed 
at  that  time  by  the  Food  Administration  officials.1 

So  much  for  encouragement  of  Cuban  production. 
The  activities  of  the  Food  Administration  in  encourag- 
ing domestic  production  and  the  problems  resulting 
therefrom  are  inextricably  interwoven  with  other  matters 
and  are  therefore  best  set  forth  in  their  proper  places 
in  other  chapters  below. 

Restrictions  on  Consumption 

While  the  Food  Administration  was  endeavoring  to 
encourage  sugar  production  in  the  United  States  and 
Cuba  as  far  as  possible,  it  was  inevitable  that,  should 
the  war  continue  for  several  years,  there  would  be  a 

1  See  page  128  for  figures  of  increased  production  in  Cuba. 


MOBILIZATION  BY  THE  SUGAR  DIVISION  23 

continuous  and  progressive  decline  in  domestic  sugar 
production,  following  the  increased  absorption  of  men 
into  the  military  machine  and  into  war  industries. 
Moreover  the  European  beet-sugar  supply  was  being 
reduced  further  each  year  of  the  war,  thus  causing 
proportionally  greater  inroads  upon  the  sugar  supply 
of  the  Western  Hemisphere.  Finally,  the  basic  problem 
was  always  the  question  of  tonnage.  It  was  evident 
that  if  the  people  of  the  United  States  would  reduce 
their  sugar  consumption  by  only  500,000  tons,  the  result- 
ing conservation  of  tonnage  would  be  a  significant  con- 
tribution towards  a  solution  of  the  shipping  problem. 
The  advantages  of  such  conservation  from  the  view- 
point of  economies  in  the  national  fund  of  labor,  ma- 
chinery, and  raw  materials  were  also  obvious. 

Accordingly,  appeals  were  made  by  the  Food  Ad- 
ministration for  voluntary  conservation  by  the  con- 
suming public.  Thus,  for  example,  on  October  16, 
1917,  Mr.  Hoover  requested  the  people  in  the  Western 
areas  of  the  country  to  reduce  their  consumption  of 
candy  and  sweet  drinks,  so  that  more  of  the  beet  sugar 
produced  in  this  part  of  the  country  might  move  east- 
ward to  relieve  the  shortage  conditions  there  existent. 
Then  again,  the  American  public  was  asked  to  go  on  an 
honor  basis  of  3  Ibs.  per  person  per  month  on  December  13, 
1917,  and  also  to  reduce  the  use  of  candy  and  sweet 
drinks.  Supplementing  appeals  to  the  general  public, 
the  distributing  trade  was  requested  to  regulate  the 
amounts  of  sugar  sold  to  the  various  sugar-using  in- 
dustries. Thus,  for  example,  on  October  25,  1917, 
refiners  were  advised  to  deliver  to  manufacturers  such 
quantities  of  sugar  as  when  added  to  their  stocks  on 
hand,  would  amount  to  fifty  per  cent  of  their  normal 
requirements. 

These  voluntary  appeals  did  not  reduce  consumption 
sufficiently  and  the  "certificate"  plan  of  rationing, 
described  below,  was  adopted  early  hi  1918. 


24       GOVERNMENT  CONTROL  OF  SUGAR 

The  year  1917  thus  closed  with  the  various  branches 
of  the  domestic  sugar  industry  mobilized  for  war  pur- 
poses, cooperation  established  between  the  Allies  and 
the  United  States,  the  distribution  of  available  supplies 
under  government  direction  assured  for  the  crop  year 
1917-18,  and  measures  initiated  aiming  at  increased 
production  and  regulation  of  consumption.  The  work 
of  the  Food  Administration  was,  however,  only  begun. 
For  it  was  essential  to  prepare  for  the  future  on  the 
generally  recognized  assumption  that  the  war  would 
continue  beyond  the  coming  crop  year  of  1917-18. 
The  beet  farmers  in  the  West  were  already  preparing 
for  the  planting  of  the  1918-19  crop  and  active  measures 
were  essential  to  stimulate  an  increased  sowing  or  at 
least  to  maintain  the  normal  acreage.  Moreover,  it 
was  necessary  to  consider  the  prospects  of  available 
supplies  and  demand  for  the  Allies  for  the  year  1918  in 
order  to  provide  for  a  possible  shortage  in  the  last 
quarter  of  the  year.  It  was  in  the  attempted  solution 
of  these  difficulties  that  the  Sugar  Equalization  Board 
was  created,  as  the  following  pages  indicate. 


CHAPTER  II 


Problems  Relating  to  Price 

THE  difficulties  of  the  Food  Administration  in  re- 
gard to  the  price  of  sugar  for  the  1918-19  crop  emerged 
from  its  accepted  policy  of  encouraging  domestic  sugar 
production.  For  early  in  the  history  of  the  Food  Ad- 
ministration there  was  definite  acknowledgment  of 
the  fact  that  an  encouragement  of  domestic  sugar  pro- 
duction was  highly  desirable,  mainly  because  of  the 
necessity  for  conservation  of  import  tonnage  but  also 
in  view  of  the  gradual  reduction  in  the  world's  supply. 
It  was  hardly  to  be  expected  that  war  conditions,  with 
the  consequent  reduction  of  the  labor  supply,  the  high 
prices  paid  for  competing  crops,  and  the  high  price  of 
materials,  would  allow  much  increase  in  the  domestic 
sugar  production,,  but  it  was  essential  to  take  measures 
to  maintain,  at  least,  the  normal  production. 

In  anticipation  of  a  possible  reduction  in  the  sugar- 
beet  acreages  for  the  campaign  of  1918-19,  owing  to  the 
competition  of  more  lucrative  crops  and  high  costs  of 
labor  and  materials,  Mr.  Hoover  sent  the  following 
circular  letter  to  all  sugar-beet  farmers,  dated  October  22, 
1917: 

One  of  the  most  vital  problems  confronting  the  nation  is  that 
of  procuring  sufficient  sugar  to  meet  the  requirement  of  our 
people  and  of  the  Allied  Nations  fighting  our  common  battle. 
The  production  of  cane  sugar  in  this  hemisphere  can  and  will  be 
increased  to  a  limited  degree.  But  we  must  rely  upon  the  farmers 

25 


26  GOVERNMENT  CONTROL  OF  SUGAR 

in  sugar-beet  producing  sections  of  the  country  for  a  part  of  the 
needed  supply.  I,  therefore,  earnestly  appeal  to  every  farmer, 
so  situated,  to  come  to  his  country's  aid  in  this  hour  of  need. 
Without  the  cooperation  of  the  American  beet  grower  our  task 
will  be  very  difficult  and  our  ability  to  respond  to  the  calls  to 
be  made  upon  us  for  this  very  essential  commodity  will  be  cur- 
tailed. It  is  at  least  the  duty  of  every  beet  grower  to  maintain 
in  1918  his  normal  acreage  of  sugar  beets.  It  is  his  privilege  to 
increase  the  acreage  to  the  extent  that  a  well-balanced  production 
of  crops  will  permit,  and  in  this  manner  effectively  demonstrate 
his  patriotism. 

It  developed,  however,  that  the  beet  farmers  in  the 
West  were  refusing  to  sign  the  customary  contracts  for 
acreage  with  the  beet-sugar  companies  because  they  felt 
themselves  unjustly  treated  with  regard  to  prices. 
Moreover,  their  costs  of  production  were  mounting 
rapidly,  competing  crops  were  becoming  more  profitable, 
and  there  was  a  feeling  that  with  a  price  restricted  by 
agreement  between  the  sugar  factories  and  the  govern- 
ment, the  raising  of  beets  would  become  progressively 
less  profitable  in  comparison  with  the  production  of 
other  food  commodities,  the  prices  for  which  were  not 
regulated  by  the  government.  Mr.  Hoover  thereupon 
appointed  local  commissions  in  the  principal  beet- 
growing  states  to  investigate  costs  of  production  and 
he  further  urged  the  beet-sugar  companies  to  abide  by 
the  decisions  of  these  commissions,  promising  these 
companies  that  if  they  would  do  so,  the  government  in 
turn  would  undertake,  in  so  far  as  it  was  able,  to  read- 
just prices  for  the  sugar  made  from  these  higher  cost 
beets  so  as  to  cover  the  increased  outlay  involved. 

These  commissions  summoned  witnesses  and  conducted 
exhaustive  examinations  in  the  various  states,  later 
submitting  reports  to  Mr.  Hoover.  The  stenographic 
reports  of  the  California  hearings  alone  consisted  of 
nine  thick  volumes  of  typewritten  matter,  containing 
the  testimony  of  nearly  one  hundred  growers  of 
sugar  beets  from  the  various  sections  of  California. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD   27 


The  Colorado  and  the  Nebraska  commissions  recom- 
mended that  farmers  be  paid  a  basic  price  of  about 
$10  per  ton  for  beets,  while  the  California  Commission 
recommended  a  basic  price  of  $8.25  per  ton  for  beets  of 
15  per  cent  sucrose  content,  with  various  differentials  for 
higher  and  lower  grade  beets,  respectively. 

The  beet-sugar  factories  agreed  to  abide  by  the 
decisions  of  these  commissions  and  there  is  definite 
evidence  that  they  carried  out  their  promises.  The 
Department  of  Agriculture  reports  the  following  average 
prices  paid  farmers  for  beets  in  1918  in  the  various  states 
as  compared  with  other  years : 

AVERAGE  PRICE  PAID  FOR  BEETS  PER  TON1 


STATE 

1918 

1917 

1916 

California  

$Q.CK 

$7.60 

$6.30 

Colorado    ...... 

10.02 

7.28 

6.06 

Idaho    

10.00 

7.06 

6.16 

Michigan   ...... 

10.08 

8.04 

6.14. 

Nebraska  

0.06 

7.22 

Ohio      

10.03 

7.18 

6.83 

Utah      

IO.OI 

7.O4 

^.7^ 

Wisconsin  

IO.OO 

8.81 

Others  

9.86 

7.28 

6.18 

United  States  (average)     . 

$10.00 

$7-39 

$6.12 

The  percentage  of  increase  for  the  United  States  as 
a  whole,  in  the  price  paid  the  farmers  for  beets  in  1918, 
as  compared  with  1917,  was  thus  35.3  per  cent.  This 
increase  in  the  price  of  beets  was  of  course  reflected  in 
higher  costs  for  the  beet-sugar  factories  since  the  outlay 
for  beets  represented  58.2  per  cent  of  the  total  cost  of 
sugar  production  in  the  years  1909  through  1914. 
Moreover,  the  cost  of  all  other  materials  used  hi  sugar 

1  From  Monthly  Crop  Reports,  April,  igig,  and  April,  1918. 


28       GOVERNMENT  CONTROL  OF  SUGAR 

production  and  the  wages  of  labor  had  also  increased 
rapidly. 

The  Tariff  Commission  cooperated  actively  with  the 
Food  Administration  in  seeking  to  determine  as  far  as 
possible  the  actual  increase  in  costs.  The  results  of 
the  investigations  carried  on  at  that  time  have  been 
incorporated  in  part  in  a  bulletin  published  recently 
by  the  Tariff  Commission.  In  this  bulletin  the  Com- 
mission made  the  following  pertinent  comment  relative 
to  increasing  costs : l 

"There  has  been  a  substantial  advance  in  the  prices  of  all  the 
principal  items  entering  into  the  production  of  sugar.  Prices 
were  higher  for  the  season  1917-18  than  before  the  war,  and  higher 
for  the  season  1918-19  than  for  1917-18.  The  greatest  percentage 
advance  is  shown  in  textiles,  231  per  cent  for  bags  and  256  per 
cent  for  filter  cloth.  Such  high  percentage  advances,  however, 
add  less  to  the  cost  of  sugar  than  items  such  as  labor,  which  show 
a  lower  percentage  advance  but  are  relatively  more  important. 
A  rise  of  200  per  cent  in  filter  cloth  would  add  about  $1.30  to  the 
cost  of  a  ton  of  sugar  in  1918-19  above  the  cost  of  1917-18,  while 
an  increase  of  only  40  per  cent  in  the  wages  of  factory  labor  alone 
would  add  over  $3  and  if  the  rise  extended  to  agricultural  labor,  as 
manifested  by  the  increased  cost  of  beets,  the  increased  cost  of  a 
ton  of  sugar  would  be  over  $12." 

On  the  basis  of  the  data  submitted  by  the  producers 
to  the  Tariff  Commission  and  the  Food  Administration, 
it  was  possible  to  compute  the  probable  cost  of  produc- 
ing a  ton  of  sugar  for  the  campaign  of  1918-19  for  each 
producer  and  it  was  possible  to  prepare  a  cost  line  curve 
showing  the  relative  importance  in  sugar  production  of 
the  low  and  high  cost  producers. 

Such  analysis  revealed  the  following  situation : 
(i)  A  price  of  n^  cents  per  pound  for  seaboard  re- 
fined sugar  would  have  been  essential  to  cover  all  pro- 
ducers and  yield  a  profit  of  a  cent  a  pound  to  the  highest 
cost  producers  (excluding  several  sporadic  cases  of  ab- 

1  Costs  of  Production  in  the  Sugar  Industry,  Tariff  Information,  Series  f  g, 
page  31. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD       29 

normally  high  costs  due  to  special  disaster  or  disad- 
vantage). 

(2)  9  cents  a  pound  would  have  been  essential  to  cover 
approximately  85  per  cent  of  the  production  and  yield 
a  profit  of  a  cent  a  pound  to  the  higher  cost  producers  of 
the  group. 

(3)  7.45  cents  a  pound,  the  preceding  year's  price, 
would  have  covered  but  30  per  cent  of  the  production, 
yielding  a  profit  of  i  cent  per  pound  to  the  higher  cost 
producer  of  this  group. 

It  was  therefore  necessary  that  a  price  of  at  least 
9  cents  a  pound  for  refined  sugar  be  agreed  upon  if  the 
beet-sugar  production  was  to  be  maintained.  Even 
at  that  relatively  high  price  it  was  clear  that  many 
factories  would  face  a  loss,  but,  on  the  other  hand,  it 
was  to  be  reasonably  expected  that  a  decreased  pro- 
duction from  this  source  would  be  counterbalanced  by 
the  increased  production  of  the  lower  cost  companies, 
owing  to  the  stimulation  of  a  profitable  price. 


COST:  CENTS  PEE  POUND  (VALUE  OP 
MOLASSES  DEDUCTED) 

PER  CENT  OF  TOTAL  PRODUCTION  or 
SUGAR  PRODUCED  UNDER  EACH  COST 
IN  LOUISIANA 

Campaign  of  1917- 
1918 

Anticipated  for 
1918-1919 

5    cents  

II.7 
I4.I 

34-6 
6l.2 
86.4 
95-8 
96.4 

98.3 
99-4 
99.4 

2.1 

2-3 
I7.8 

27-3 

33-9 
47.8 

53-8 

74-9 
91.1 

95-2 

52  cents  

6    cents            .    •  

65  cents  

7    cents  

7^  cents  

8    cents  

8|  cents  

9    cents  

oA  cents  . 

The  domestic  cane-sugar  producers  of  Louisiana  were 
in   much   the   same   situation.     Figures   submitted   to 


30  GOVERNMENT  CONTROL  OF  SUGAR 

the  Tariff  Commission  and  the  Food  Administration 
by  the  Louisiana  producers  showed  the  situation  there, 
as  given  in  the  table  on  the  preceding  page : l 

While  the  above  figures  show  the  cost  of  sugar  pro- 
duction to  be  rather  high  for  Louisiana,  it  must  be  re- 
membered that  the  greatest  part  of  the  sugar  produced 
in  that  part  of  the  country  is  suitable  for  direct  con- 
sumption and  commands  a  price  almost  equal  to  that 
of  the  refiners'  standard  grade  of  granulated  sugar. 
The  cost  figures  above,  therefore,  are  more  comparable 
with  the  beet-sugar  producers'  costs  rather  than  with  the 
Hawaiian  or  Cuban  cane  producers'  figures.  It  was 
however  clear  from  the  figures  submitted  that  a  large 
proportion  of  the  Louisiana  Sugar  Industry  could  not  be 
maintained  at  a  price  basis  of  less  than  10  cents  per 
pound  for  refined  sugar.2 

Investigation  made  by  the  Tariff  Commission  of  the 
Hawaiian  costs  revealed  a  situation  generally  similar  to 
that  obtaining  in  the  continental  United  States.  The 
average  cost  of  producing  a  pound  of  sugar  in  Hawaii  had 
mounted  from  3.06  cents  hi  1913-14  to  4.08  cents  in 
1916-17  and  5.34  cents  in  igiy-iS.3  The  increase  was 
thus  much  greater  in  the  one  year  from  1916-17  to 
1917-18  than  in  the  three-year  period  from  1913-14  to 
1916-17.  It  was  anticipated  that  there  would  be  a  still 
greater  increase  in  cost  for  the  season  of  1918-19,  owing 
to  a  decreased  production  resulting  from  the  impos- 
sibility of  obtaining  nitrates  for  fertilizer.  Nitrates  are 
absolutely  essential  for  sugar  production  in  Hawaii, 
since  the  soils  there  are  of  volcanic  origin  and  contain 

1  These  figures  were  compiled  by  the  writer  from  two  sets  of  schedules  sub- 
mitted by  the  Louisiana  producers,  one  set  having  been  submitted  to  the  Tariff 
Commission,  the  other  set  to  the  Statistical  Division  of  the  Food  Administration. 

2  That  is  to  say,  it  was  anticipated  that  about  10  per  cent  of  the  production 
for  1918-19  would  be  produced  at  a  cost  of  over  9  cents  per  pound.     A  basic 
price  of  10  cents  per  pound  would  thus  be  required  in  order  to  give  these  pro- 
ducers a  profit  of  a  cent  per  pound. 

'See  page  14  of  Tariff  Information  Series  No.  9  for  detailed  figures  of  in- 
creasing costs  for  various  items. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD   31 

no  nitrates  inherently,  such  as  the  soils  of  other  sugar- 
producing  regions.  The  United  States  Shipping  Board 
ruled,  however,  that  on  account  of  the  scarcity  of  ton- 
nage, no  agricultural  nitrates  should  be  transported  to 
Hawaii.  It  was  estimated  that  the  crop  would  be  re- 
duced 160,000  tons  if  there  were  no  further  deliveries  of 
nitrates. 

In  contrast,  however,  with  those  high  costs  hi  the 
domestic  industry  was  the  condition  hi  Cuba.  Here, 
too,  costs  were  mounting,  but  they  were  not  as  high  as 
in  the  United  States.  The  Mission  from  the  Republic 
of  Cuba,  appointed  by  President  Menocal  to  negotiate 
a  price  for  the  1918-19  crop,  submitted  a  brief  to  the 
Food  Administration  relative  to  the  costs  of  production 
and  the  price  for  the  1918-19  crop,  in  which  it  was  stated 
that  the  average  cost  per  pound  of  sugar  in  1916-17  for 
firms  representing  a  production  of  946,146  short  tons, 
or  31.28  per  cent  of  the  total  crop  of  that  year,  was 
3.355  cents,  whereas  in  1917-18,  the  cost  per  pound  for 
firms  representing  a  production  of  1,037,318  short  tons, 
or  30.1  per  cent  of  the  total  crop,  had  mounted  to  3.88 
cents,  an  increase  of  .525  cents  per  pound.  The  Mission 
stated  that  a  price  of  5.60  f.  o.  b.  at  the  north  ports  of 
Cuba  and  5.55  f.  o.  b.  south  ports  would  be  required  to 
sustain  and  to  stimulate  the  production  of  sugar  for  the 
1918-19  crop,  as  compared  with  4.60  north  ports  of 
Cuba  and  4.55  south  ports  for  the  previous  crop.  The 
Commission  thus  apparently  anticipated  an  average 
increase  of  about  i  cent  per  pound  in  the  cost  of  sugar 
production  in  Cuba  for  1919  as  compared  with  1918. 

Not  only  were  producers'  costs  mounting  but  re- 
finers' costs  as  well.  The  committee  of  the  refiners, 
which  was  appointed  to  inquire  into  and  report  upon  the 
increased  costs  of  refining,  reported  on  May  3,  1918, 
the  following  average  increases  since  September  15, 
1917,  on  the  principal  items  which  go  to  make  up  the 
cost  of  refining : 


32        GOVERNMENT  CONTROL  OF  SUGAR 

On  labor 0313  cents  per  Ib. 

On  fuel 0089  cents  per  Ib. 

On  packages     .....     .1178  cents  per  Ib. 

On  supplies 0076  cents  per  Ib. 

Total 1656  cents  per  Ib. 

The  price  situation,  as  it  appeared  in  June,  1918, 
may  be  then  summarized  as  follows  : 

(1)  Cuba,  which  normally  supplied  the  United  States 
with  49.8  1  per  cent  of  the  total  annual  supply,  requested 
a  basic  price  for  raw  sugar  of  5.60  cents  per  hundred 
pounds  f.  o.  b.  Cuba.     This  price  was  considered  suf- 
ficient to  stimulate  production  in  Cuba. 

(2)  The  domestic  beet  sugar  industry,  which  supplied 
15.97  l    Per  cent  °f  the  total  annual  consumption  of 
the  United  States,  required  a  basic  price  of  at  least  9 
cents  per  pound  for  refined  sugar  to  maintain  production. 

(3)  The  domestic  cane  industry  in  Louisiana,  which 
supplied  6.27  l  per  cent  of  the  total  annual  consumption 
of  the  United  States,  required  a  basic  price  for  refined 
sugar  of  about  10  cents  per  pound  to  maintain  the  pro- 
duction. 

(4)  The    Hawaiian   industry,   which   supplied    13.66 
per  cent  of  the  total  annual  consumption,  required  about 
the  same  price  as  the  domestic  beet  industry. 

(5)  The  refiners  requested  an  increased  margin  of 
about  1 6  cents  per  hundred  pounds  to  cover  the  in- 
creases in  refining  costs. 

If  the  price  of  sugar  was  to  be  raised  only  sufficiently 
to  meet  the  needs  of  the  Cuban  producers,  the  resulting 
basic  wholesale  price  for  refined  sugar  at  seaboard  re- 
fining points  would  have  been  8.54  cents  per  pound. 
The  difference  between  8.54  cents  and  the  5.60  cents  to 
be  paid  to  the  Cubans  for  raw  sugar  would  have  been 
made  up  as  follows : 

1  Average  for  years  1911-12  through  1914-15,  compiled  from  figures  on  page 
446  of  reports  on  "The  Cane  Sugar  Industry,"  Miscellaneous  Series,  No.  53,  of 
Department  of  Commerce. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD   33 

Basic  price  for  96°  test  centrifugal  sugar  f.  o.  b.  north  ports 

Cuba  per  100  Ibs $5.60 

Duty,  freight,  and  insurance 1.40 

Refiners' existing  margin  (net  cash  basis) 1.30 

Probable  increase  in  refiners'  margin  essential  to  meet  in- 
creased cost  of  refining .15 

Plus  7  per  cent  of  increased  price  of  raws  1  to  refiners    .     .  .09 

Basic  (net  cash)  wholesale  price  for  refined  sugar  per  100  Ibs.  8.54 

Between  the  above  price  of  8.54  per  100  Ibs.  for  the 
refined  Cuban  sugar  at  seaboard  points  and  the  basic 
net  cash  price  of  8.82  2  desired  for  the  domestic  beet 
sugar  there  was  a  differential  of  28  cents  per  hundred 
pounds.  The  dilemma  confronting  the  Food  Adminis- 
tration was  either  to  advance  the  price  of  sugar  in  the 
United  States  to  8.82  2  cents,  thus  covering  the  needs  of 
the  domestic  industry,  but  giving  the  Cubans  28  cents 
a  hundred  pounds  more  than  they  had  asserted  was 
essential  to  maintain  and  stimulate  the  Cuban  pro- 
duction, or  disregarding  the  previous  promise  to  the 
domestic  industry,  to  advance  the  price  only  to  $8.54, 
the  point  where  the  Cuban  production  would  be  main- 
tained. 

There  were  two  objections  to  the  first  plan  —  the 
fixing  of  a  price  of  8.82  cents : 

(1)  It  would  have  involved  the  payment  to  Cuba  by 
the  people  of  the  United  States  of  about  $18,000,000 
more  than  was  essential  to  maintain  the  Cuban  pro- 
duction during  1919. 

(2)  The  Allies,  particularly  the  United  Kingdom,  who 
wished  to  buy  about  one-third  of  the  Cuban  crop  to 
meet  their  needs,  as  they  had  done  in  the  previous  year, 
strongly  objected  to  making  this  unnecessary  payment 
to  Cuba. 

There  were,  on  the  other  hand,  several  objections  to 
the  second  plan  —  the  fixing  of  a  price  of  8.54 : 

1  Required  to  cover  the  7  per  cent  loss  of  sugar  in  the  melting  process. 
3  The  list  price  of  $9,  less  2  per  cent  for  cash. 


34       GOVERNMENT  CONTROL  OF  SUGAR 

(1)  The  Food  Administration,  as  explained  above,1 
had  assured  the  beet-sugar  producers  that  if  they  would 
abide  by   the   recommendations   of   the   various   state 
commissions  relative  to  the  prices  to  be  paid  farmers  for 
beets,  the  Food  Administration  would  undertake,  so  far 
as  it  was  able,  to  obtain  for  them  a  fair  price  for  the 
sugar  made  from  these  beets.    As  the  figures  indicated 
above  show  2  there  was  no  question  but  that  the  beet- 
sugar  producers  had  done  as  required  and  the  Food 
Administration  in  turn  was  under  obligations  to  main- 
tain its  previous  promises. 

(2)  The  lower  price  would  have  had  a  tendency  to 
discourage  the  domestic  sugar  production,  every  ton  of 
which  saved  an  equivalent  amount  of  shipping  tonnage. 
The   importance   of    the   domestic   industry   was    em- 
phasized  in   June   by   the   sudden   appearance  on  the 
Atlantic    Coast   of    German    submarines,    which    sank 
13,000  tons  of  sugar  in  a  few  days. 

The  one  practical  solution  was  the  creation  of  a  sugar 
commission,  such  as  Mr.  Hoover  had  suggested  to  the 
Senate  Committee  on  Agriculture  in  June,  1917,  which 
would  purchase  sugar  in  cooperation  with  the  Allies, 
who  already  had  a  similar  organization.  Such  an 
organization  could  purchase  from  Cuba,  Java,  Peru, 
or  from  any  foreign  source  of  supply  at  any  price  that 
was  desirable  with  a  view  to  better  economy  of  supplies 
and  shipping  for  all  the  Allies,  and  resell  to  the  American 
refiners  at  an  average  price. 

Problems  Relating  to  Supply  and  Distribution 

A  careful  inventory  made  in  the  spring  of  1918  of 
the  available  supplies  for  the  United  States  for  the  seven 
months  June-December,  1918,  revealed  the  strong 
probability  of  a  sugar  shortage.  It  was  of  course  difficult 
to  foretell  exactly  the  size  of  the  various  crops  at  that 

1  See  page  26  above.  2  See  page  27  above. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD       35 

early  date.  Varying  weather  conditions  in  Cuba  be- 
tween June  and  August  could  easily  accbunt  for  a  dif- 
ference of  some  200,000  to  300,000  tons,  or  the  equivalent 
of  almost  a  month's  supply  for  the  United  States.  The 
estimates  for  the  crop  by  the  experts  varied  from 
3,200,000  long  tons 1  to  3,589,429 2  long  tons,  and  it 
was  of  course  advisable  to  use  as  a  basis  the  most  con- 
servative figures.  The  situation  then  appeared  as 
follows : 

(Quantities  in  Short  Tons) 

Stocks  on  hand  June  i,  1918  298,000 

Raw  cane  (in  refiners'  hands)  163,000 

Beet  sugar  85,000 

Refined  cane  sugar  (in  refiners'  hands)  50,000 

298,000 

Expected  receipts  (June  i-Dec.  31,  1918)  1,981,000 

Cuban  954,000 

Hawaiian  338,000 

Porto  Rican  189,000 

Domestic  cane  150,000 

Domestic  beet  350,000 

1,981,000 

Total  stocks  and  receipts  (raw  and  refined)  2,279,000 

Total  stocks  and  receipts  (in  terms  of  refined)  2,150,000 

Requirements  for  United  States  consumption  in  terms 
of  refined  sugar  on  normal  basis  (June  i -Decem- 
ber 31,  1918)  ,  2,616,000 
Deficit  considering  United  States  consumption  only  466,000 
Deficit  considering  required  minimum  exports  to  Allies 

of  about  200,000  tons  666,000 

It  was  evident  then  that  the  margin  between  the 
available  sugar  supply  and  the  requirements  of  the 
United  States  both  for  consumption  and  exports  to  the 
Allies,  for  the  year  1918,  would  be  a  narrow  one  at  best. 
This  situation  was  due  to  three  causes,  first :  the  efforts 
to  restrict  the  consumption  of  sugar  in  the  United  States 
by  appeal  to  the  public  for  voluntary  conservation  had 

1  Willett  &  Gray's  estimate. 

2  Estimate  of  the  Cuban  statisticians,  Messrs.  Guma-Mejer. 


36       GOVERNMENT  CONTROL  OF  SUGAR 

not  been  sufficiently  fruitful;  secondly,  there  was  no 
reserve  supply  of  consequence  on  hand  in  the  United 
States,  either  in  refineries,  mills,  or  warehouses,  or  in 
the  hands  of  wholesalers,  jobbers,  and  retailers ;  thirdly, 
the  Allies,  in  order  to  economize  shipping,  were  becoming 
increasingly  dependent  on  the  Western  Hemisphere  for 
their  supplies.  It  will  be  of  importance  to  consider  each 
of  these  matters  more  in  detail. 

(i)  Difficulties  in  Restriction  of  Consumption 

The  problem  of  reducing  the  sugar  consumption  of 
the  United  States  was  an  extremely  difficult  one.  The 
prewar  annual  per  capita  consumption  of  the  United 
States  was  about  83  pounds,  as  compared  with  42  pounds 
for  France  and  91  pounds  for  the  United  Kingdom. 
The  per  capita  consumption  of  the  United  Kingdom  in 
1917  had  been  reduced  to  about  52  pounds,  while  France 
was  consuming  at  the  rate  of  35  pounds.  There  was, 
therefore,  considerable  room  for  reduction  of  sugar  con- 
sumption in  the  United  States.  But  war  conditions 
tended  to  increase  consumption  in  the  United  States. 
For  one  result  of  the  war  had  been  the  increased  pros- 
perity and  the  increased  purchasing  power  of  a  very 
large  part  of  the  consumers.  Sugar  is  normally  used, 
unlike  many  other  food  commodities,  as  a  constituent 
in  many  other  food  products,  so  that  the  demand  for 
sugar '  multiplied  in  all  directions.  Condensed  milk, 
candy,  soft  drinks,  canned  fruits  and  vegetables,  ice 
cream,  flavoring  extracts,  chewing  gum,  sweet  pickles, 
catsup,  chili  sauce,  baked  goods,  and  many  other  edible 
products,  all  require  sugar,  as  also  certain  nonedible 
products  such  as  tobacco,  dental  preparations,  drugs, 
explosives,  and  glycerine. 

Products  such  as  condensed  milk  were  exported  in 
large  quantities  to  the  Allies  and  the  sugar  so  used  was 
therefore  not  to  be  considered  as  consumed  by  the  people 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD       37 

of  the  United  States,  but  the  effect  was  to  create  a 
larger  demand  for  sugar  in  this  country.  In  addition 
the  armed  forces  of  the  United  States  consumed  much 
more  sugar  per  capita  than  the  civilian  population. 
Considerable  amounts  were  shipped  for  the  Red  Cross, 
Y.  M.  C.  A.,  Knights  of  Columbus,  and  other  war  or- 
ganizations. 

The  Food  Administration,  in  accordance  with  its 
general  policy  of  voluntary  conservation,  had  endeavored 
hi  the  first  period  of  its  control  of  sugar  to  combat  this 
tendency  towards  increased  consumption  through  ap- 
peals to  the  patriotism  of  the  public  and  of  the  dealers. 
There  has  been  a  general  impression  both  in  and  out  of 
the  Food  Administration  that  these  appeals  to  patriotism 
did  not  result  in  any  saving.  The  figures  available 
demonstrated,  however,  that  a  saving  was  effected. 
Consumption  remained  at  the  prewar  level,  when  a 
large  increase  in  consumption  would  have  been  an- 
ticipated such  as  actually  occurred  in  1919,  the  first 
year  of  unrestricted  consumption. 

Conservation  through  patriotic  appeal  alone  was  not 
sufficient,  however,  particularly  hi  view  of  the  probable 
continuance  of  the  war  for  another  year.  It  was  es- 
sential to  create  some  restrictive  mechanism,  which  the 
Food  Administration  could  count  upon  as  being  defini- 
tively productive  of  results  whenever  quick  results  were 
desirable.  Any  card  rationing  scheme  such  as  existed 
in  Europe  involved  a  large  expense  for  printing  cards  for 
a  population  of  over  100,000,000 1  and  a  still  greater 
expense  for  general  supervision  and  execution. 

It  was  obvious  that  to  solve  the  problem  satisfactorily 
there  was  need  for  the  creation  of  such  a  corporation  as 
Mr.  Hoover  had  originally  suggested,  which  could  under- 
take the  problem  of  sugar  distribution  and  control,  and 
pay  the  expenses  of  such  undertaking  through  a  frac- 

1  It  was  estimated  that  the  printing  cost  alone  would  have  beem  $100,000  a 
month.  (See  page  44  below.) 


38       GOVERNMENT  CONTROL  OF  SUGAR 

tional  profit1  made  in  the  purchase  abroad  of  foreign 
sugars  and  the  resale  to  the  American  refiners. 

(2)  The  Reserve  Stocks 

The  sugar  supply  of  the  United  States  at  any  one 
time  consists  bf  three  parts:  first,  the  "visible"  stocks, 
that  is,  raw  and  refined  sugars  held  in  mills,  factories, 
refineries,  and  bonded  warehouses  in  the  United  States ; 
second,  the  "invisible"  supply,  or  sugar  held  by  hotels 
and  restaurants,  sugar-using  industries,  jobbers,  whole- 
salers, and  retailers ;  third,  the  sugar  available  from  the 
current  seasonal  production  in  the  various  sources  of 
supply,  principally  Louisiana,  the  beet-sugar  territory 
of  the  United  States,  Cuba,  Hawaii,  Porto  Rico,  and  the 
Philippines.  A  gradual  attenuation  had  occurred  during 
the  war  in  both  the  "visible"  and  the  "invisible"  sup- 
plies of  sugar  in  the  United  States.  This  decline  was 
due  to  a  combination  of  several  factors.  First,  the 
shipping  situation  for  the  United  States  had  not  been 
such  as  to  encourage  the  movement  of  more  sugar  from 
Cuba,  Hawaii,  and  Porto  Rico  than  was  necessary  to 
meet  current  needs.  Second,  the  stabilization  of  prices 
and  profits  for  all  the  branches  of  the  sugar  industry 
from  refiner  to  retailer  had  a  strong  tendency  to  dis- 
courage larger  holdings  than  was  essential  for  a  "hand 
to  mouth"  trade.  In  previous  years  the  speculative 
factor  had  induced  larger  holdings  of  sugar,  particularly 
in  those  months  of  the  year  when  there  was  heavy  sugar 
production  in  all  the  sources  of  supply.  During  the 
war,  on  the  other  hand,  with  the  price  of  sugar  stabilized 
and  with  the  prospect  of  equitable  distribution  of  the 
available  sugar  supplies  by  government  control,  there 
was  no  inducement  to  accumulate  stocks.  Third,  there 
was  a  general  world  shortage  of  supplies,  particularly 

1  Such  a  profit  would  otherwise  have  been  dissipated  in  small  margins  to 
the  foreign  producer  or  the  refiner. 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD   39 

for  allied  and  neutral  countries,  and  this  shortage  forced 
reduced  surplus  holdings  in  all  importing  countries. 

In  view  of  this  reduction  in  marginal  supplies  the 
Food  Administration  was  constantly  in  fear  of  a  sugar 
famine,  if  there  should  be  any  interruption  in  the  con- 
tinuous flow  of  sugar  to  the  United  States  from  Cuba, 
Hawaii,  or  Porto  Rico.  For  there  was  always  the  pos- 
sibility of  labor  disturbances  in  the  sources  of  supply 
or  in  the  ports  of  the  United  States.  It  was  felt  that 
it  was  necessary  to  provide  the  United  States  with  a 
reserve  supply  of  at  least  two  months  requirements  of 
sugar,  or  about  600,000  tons.1  Such  an  undertaking, 
however,  required  large  financial  resources  and  could 
not  properly  be  managed  by  the  existing  agencies  in  the 
Food  Administration. 

(3)  The  Sugar  Position  of  the  Allies 

As  the  war  continued  the  Allies  had  turned  in  in- 
creasing degree  to  the  United  States  and  Cuba  for 
supplies  of  sugar.  The  figures  on  the  following  page 
show  to  what  extent  this  was  true. 

While  the  production  of  sugar  hi  Cuba  and  the  United 
States  had  increased  considerably  in  this  same  period, 
there  had  been  a  simultaneous  increase  2  in  consumption 
in  the  United  States,  which  partially  neutralized  this 
gain  hi  production.  The  net  result  of  the  operation  of 
the  several  factors  noted  was  to  leave  a  smaller  margin 
of  supplies  for  the  United  States  for  domestic  use  in 
1917  than  was  present  in  1913.  But  in  1918  the  drain 
from  the  Allies  was  to  be  even  greater,  since  the  United 

1  The  Food  Administration  was  influenced  in  this  direction  by  the  example 
of  the  British  Ministry  of  Food,  which  had  accumulated  271,000  long  tons  of 
sugar  on  June  i,  1918,  as  against  only  30,000  tons  on  June  i,  1917,  and  243,406 
tons,  the  prewar  average  for  June  i . 

*  This  increase  in  production  amounted  to  about  1,040,000  short  tons,  while 
the  increase  in  consumption  amounted  to  about  225,000  short  tons  of  refined 
sugar.  The  requirements  of  the  United  Kingdom,  France,  and  Italy  from  the 
United  States  and  Cuba  increased  877,000  tons  in  this  period. 


GOVERNMENT  CONTROL  OF  SUGAR 


States  Food  Administration,  acting  in  cooperation  with 
the  Allied  governments,  had  purchased  in  December, 
1917,  the  entire  Cuban  exportable  surplus  for  the  United 
States  and  Allies,  a  full  third  of  which,  or  approximately 
1,150,000  short  tons,  was  to  go  to  the  United  Kingdom, 
France,  and  Italy.  When  the  contract  was  made  in 
December,  1917,  it  was  believed  that  the  needs  of  the 
Allies  would  be  met  fully  by  this  allotment  together 
with  other  minor  sources  of  supply  which  they  could  tap. 

IMPORTS  INTO  THE  UNITED  KINGDOM,  FRANCE,  AND  ITALY  FROM 
THE  UNITED  STATES  AND  CUBA 

(Quantities  in  Short  Tons) 


1913 

1914 

1915 

1916 

1917 

Imports  from  United 
States   (mostly  re- 
fined) to  — 
United  Kingdom 
France  .... 
Italy      .... 

141,602 
978 

211,346 
210,648 

187,803 
275,644 
32,830 

42,534 
232,726 
20,962 

142,580 

421,994 

496,277 

296,222 

Imports    from    Cuba 
(mostly  raw)  to  — 
United  Kingdom 
France  .... 
Italy     .... 

251,134 
21,382 

293,290 
37,636 

402,915 
6,801 

619,992 
120,196 
6,285 

789,032 

61,243 
3,823 

272,516 

330,926 

409,716 

746,473 

854,098 

Total    imports    from 
U.  S.  and  Cuba  into 
United     Kingdom, 
France,  and  Italy  . 

272,516 

473,506 

831,710 

1,242,750 

1,150,320 

The  great  effort,  however,  put  forth  by  the  United 
States  and  the  Allies  in  1918  did  not  tolerate  any  waste 
of  shipping,  and  it  was  found  in  June  that,  assuming  a 


REASONS  FOR  FORMATION  OF  SUGAR  BOARD       41 

Cuban  exportable  surplus  of  3,472,000  short  tons,  at 
least  an  additional  112,000  tons  of  refined  sugar  would 
be  required  in  order  to  maintain  the  meager  rations  of 
the  Allies  and  to  prevent  their  recourse  to  distant 
markets  such  as  Java. 

So  much,  then,  for  the  problems  facing  the  Food 
Administration  in  connection  with  the  1918-19  crops. 
Solution  of  the  price  problems  was  required  immediately, 
since  beet  sugar  made  from  the  new  crops  was  about 
to  enter  the  market.  The  problems  relating  to  supply 
and  distribution  were  even  more  pressing,  since  a  severe 
sugar  shortage  was  threatening.  The  following  pages 
discuss  the  manner  in  which  these  two  sets  of  problems 
were  met,  through  the  work  of  the  Sugar  Equalization 
Board. 


CHAPTER  III 
INCORPORATION  AND  ORGANIZATION 

IN  the  preceding  chapter,  the  author  endeavored 
to  point  out  the  main  problems  which  the  Food  Ad- 
ministration faced  in  the  spring  of  1918  in  connection 
with  the  price,  supply,  and  distribution  of  sugar  in  the 
United  States  and  the  urgency  for  the  creation  of  a  com- 
mission or  corporation,  as  had  been  done  abroad,  to 
solve  these  problems.  In  June,  1918,  before  taking 
definite  action  to  form  such  a  corporation,  Mr.  Hoover 
sent  the  following  memorandum  to  the  President,  out- 
lining the  entire  situation : 

The  time  has  arrived  when  we  must  make  several  changes 
in  our  methods  of  handling  sugar. 

First:  We  must  make  some  preparation  for  handling  the  new 
sugars,  as  our  domestic  beet-  and  cane-sugar  production  begins 
late  in  August,  although  the  new  Cuban  sugar  does  not  arrive 
until  December.  We  have  made  great  endeavors  to  stimulate 
our  domestic  sugar  production  this  year,  not  only  because  of  the 
world  shortage  in  sugar  but  also  to  relieve  import  tonnage. 
Amongst  our  activities  in  this  direction  was  the  creation  of  a 
series  of  commissions,  which  arranged  for  a  large  advance  to 
beet  producers  over  their  return  for  the  year  before.  In  order 
to  secure  from  the  factories  an  adherence  to  the  "commission" 
price  for  sugar  beets,  I  undertook  that  we  would  adjust  the  price 
of  sugar  so  far  as  the  Government  was  able,  next  year,  to  cover 
the  increased  cost  of  beets  and  a  fair  profit.  Much  the  same 
story  applies  to  Louisiana  sugar. 

We  shall  probably  not  secure  as  large  a  production  of  do- 
mestic sugar  as  last  year,  however,  as  the  shortage  of  labor  (the 
beets  are  an  intensive  crop)  will  no  doubt  curtail  them  somewhat. 
However,  in  order  to  cover  assurances  it  will  be  necessary  to  in- 
crease the  price  of  domestic  sugar  somewhere  between  one  and 
one  half  cents  per  pound,  —  the  figure  not  being  accurately 

42 


INCORPORATION  AND  ORGANIZATION  43 

determinable  until  we  have  completed  further  investigation  as 
to  costs  of  sugar  production  this  year,  in  which  matter  the  Tariff 
Commission  is  extending  us  great  assistance. 

On  the  other  hand,  the  cost  of  production  in  Cuba  has  not 
increased  anything  like  the  proportion  of  increased  cost  in  the 
United  States,  for  the  fundamental  reason  that  there  has  been 
no  comparable  advance  in  the  cost  of  labor  and  supplies  in  Cuba 
to  that  of  the  United  States.  It  will,  however,  be  necessary  to 
increase  the  price  of  Cuban  sugar  next  year  to  some  extent  to 
cover  their  advanced  cost  and  maintain  a  stimulated  production, 
but  advance  in  Cuban  sugar  will  probably  not  amount  to  more 
than  one  half  cent  a  pound  to  give  ample  satisfaction  to  the  Cuban 
people. 

We  therefore  arrive  at  a  disparity  in  these  situations  for 
which  we  must  find  some  solution.  If  we  advance  the  price 
of  Cuban  sugar  to  a  level  that  will  carry  out  our  assurance  to 
the  domestic  producer  this  year  and  stimulate  it  for  next  year, 
we  will  be  paying  to  the  Cubans  from  one  half  to  one  cent  a  pound 
more  than  is  necessary  to  maintain  their  production  with  fair 
profit.  This  will  mean  a  toll  to  the  American  people  of  from 
$20,000,000  to  $40,000,000. 

The  only  solution  that  I  can  see  —  and  I  have  consulted  Dr. 
Taussig,  who  is  in  agreement  —  would  be  that  we  should,  in 
order  to  secure  foreign  sugars  generally  in  cooperation  with  the 
Allies,  place  ourselves  upon  the  same  footing  as  they  by  the  pur- 
chase of  foreign  sugar  for  our  government  jointly.  We  should 
purchase  in  Cuba,  Peru,  Mexico,  Java,  or  anywhere  else  at  prices 
proper  to  the  occasion  and  make  an  average  price  to  our  refiners. 
This  next  year  the  operation  would  show  considerable  profits.  If 
this  were  done,  we  would  need  to  secure  from  you,  say,  $5,000,000 
capital  and  to  make  a  corporation  to  handle  the  details.  The 
business  would  not  be  accompanied  with  risk,  for  it  would  be 
protected  with  contracts  for  both  purchase  and  sale.  Such  an 
arrangement  would  save  us  from  many  of  the  great  difficulties  of 
our  present  sugar  arrangements  with  American  refiners  and  would 
gain  in  better  handling  of  shipping  over  present  arrangements. 

Second:  We  have  lost  considerable  sugar  by  submarines; 
the  imports  of  Philippine  sugar  have  been  greatly  curtailed  by 
shortage  of  shipping;  the  Cuban  crop  has  not  come  up  to  ex- 
pectations; the  French  and  Italians  have  lost  considerable  beet 
sugar  by  the  German  drives  —  all  cumulating  to  shorten  our 
supplies  this  year  beyond  expectations.  In  consequence  we 
must  by  various  devices  gradually  reduce  sugar  consumption 
from  July  first  onward.  Degeneration  in  sugar  supplies  is  one 
of  the  marked  features  of  every  country  and  we  must  expect  it 


44       GOVERNMENT  CONTROL  OF  SUGAR 

to  go  on  through  the  war.  Sugar  is  the  one  commodity  that 
voluntary  conservation  does  not  sufficiently  reach.  I  suppose 
the  great  sugar  eaters  are  those  of  the  least  moral  resistance  in 
the  community.  Therefore  we  must  put  into  effect  some  form 
of  sugar  rationing  and  a  drastic  control  of  distribution.  Other- 
wise we  shall  have  territorial  and  industrial  injustices  all  over 
the  country.  I  propose  an  honor  system  of  cards.  Any  execu- 
tion of  this  kind  becomes  at  once  expensive,  for  printing  alone  for 
20,000,000  households  will  cost  $100,000  a  month,  to  say  nothing 
of  supervision. 

I  would  propose  to  solve  this  by  having  the  corporation  above 
referred  to  undertake*  the  distribution  of  sugar  as  part  of  its  ex- 
penses. It  seems  to  me  fundamentally  sound  that  the  users  of 
a  commodity  should  pay  for  the  cost  of  its  distribution  rather 
than  the  Government. 

The  problem  would  probably  arise  as  to  the  ultimate  con- 
version of  profits  into  the  American  Treasury  as  the  profits  on 
foreign  sugar  will  greatly  exceed  the  cost  of  distribution.  It 
might  be  that  the  year  following  we  would  want  to  use  the  re- 
serve thus  created  to  stabilize  sugar  in  the  other  direction  by  a 
larger  proportion  of  imports,  at  a  loss,  from  more  distant  markets 
if  our  shipping  increases.  If,  at  the  end  of  the  war,  such  a  sum 
did  exist,  there  should  be  no  trouble  in  Congress  finding  a  way 
to  deal  with  it. 

The  Food  Administration  had  not  the  authority  to  buy  sugar 
directly  under  the  Food  Bill,  but  the  great  success  of  the  Grain 
Corporation  and  the  smoothness  with  which  it  has  operated,  the 
integrity  with  which  it  has  been  carried  on,  and  the  tremendous 
volume  of  its  operations  give  a  sound  precedent  to  the  feasibility 
of  the  operation.  Our  legal  staff  see  no  reason  why  it  should  not 
be  undertaken  by  yourself  from  your  emergency  funds,  as  it  is 
an  issue  of  national  importance.  I  should  be  glad  to  have  your 
views  on  the  subject. 

In  a  letter  to  Mr.  Hoover  June  17,  1918,  the  President 
expressed  his  approval  of  the  proposed  plan.  By  virtue 
of  the  Sundry  Civil  Appropriation  Act  of  July  i,  1918, 
the  President  of  the  United  States  was  empowered  to 
expend  at  his  discretion  $50,000,000  "for  the  national 
security  and  defense  and  for  each  and  every  purpose 
connected  therewith."  Under  the  powers  granted  by  the 
above  Act,  the  President  authorized  l  the  formation  of 

1  See  Appendix,  Exhibit  16,  for  letter  of  authorization,  page  225. 


INCORPORATION  AND   ORGANIZATION  45 

a  corporation  to  be  known  as  the  United  States  Sugar 
Equalization  Board,  Inc.,  and  subscribed  for  the  capital 
stock  in  the  name  of  the  United  States.  The  Board  was 
incorporated  on  July  n,  iQiS,1  in  the  state  of  Delaware 
and  the  first  meeting  of  the  Board  of  Directors  took  place 
on  July  :i8,  1918.  The  Food  Administration  issued  the 
following  notice  on  July  n,  1918,  in  relation  to  the 
objects  of  the  corporation. 

The  purposes  of  the  Board  are  to  equalize  the  cost  of  various 
sugars  and  secure  the  better  distribution.  The  arrangements 
will  facilitate  joint  dealing  with  the  Allies  in  foreign  sugars  and 
the  adjustments  of  differentials  in  overseas  freight  rates.  Under 
certain  circumstances,  it  may  be  advisable  to  acquire  the  pro- 
duction of  some  beet-sugar  factories  that  cannot  under  the  present 
price  of  beets  be  sold  to  the  public  at  a  reasonable  price.  The 
Board  will  take  charge  of  the  distribution  plan  initiated  on  July  i, 
and  will  conduct  this  plan  at  the  expense  of  the  Board.  The 
Board  will  be  incorporated  to  the  extent  of  $5,000,000  of  capital, 
which  will  be  supplied  by  the  President  from  his  special  funds, 
in  order  to  enable  it  to  deal  with  facility  in  foreign  sugars  and 
otherwise,  and  the  whole  stock  will  be  held  by  the  President  for 
the  United  States  Government.  The  object  is  to  absorb  the 
high  peaks  of  cost  in  sugar  production  and  to  make  a  small  mar- 
gin on  the  low  cost  of  certain  foreign  sugars  which  may  be  pur- 
chased, and  thus  secure  an  equalization  of  the  price  to  the  public 
on  a  lower  level  than  will  otherwise  be  possible.  The  arrange- 
ments will  further  secure  an  even  distribution  of  the  sugar  through- 
out the  United  States.  It  is  expected  that  any  profit  will  be 
equalized  to  the  consumer  over  the  year's  operations. 

At  the  first  meeting  of  the  Board  of  Directors, 
July  1 8,  1918,  at  the  offices  of  the  Food  Administration 
in  Washington,  D.  C.,  the  folio  whig  officers  were 
elected : 

Chairman  of  Board  of  Directors  Herbert  Hoover 

President  George  M.  Rolph 

Treasurer  Theodore  F.  Whitmarsh 

Secretary  Robert  A.  Taft 

1  For  certificate  of  Incorporation  and  By-Laws,  see  Appendix,  Exhibits  14 
and  15  (pp.  213-225). 


46       GOVERNMENT  CONTROL  OF  SUGAR 

An  offer  was  accepted  from  Woodrow  Wilson,  the 
President  of  the  United  States,  acting  in  behalf  of  the 
United  States,  to  subscribe  for  and  pay  in  cash  for  air 
the  unissued  shares  of  the  capital  stock  of  the  company. 
The  acceptance  of  this  offer  marked  the  end  of  the 
legal  processes  necessary  to  the  incorporation  and  forma- 
tion of  the  Board,  and  to  the  establishment  of  the 
corporation  on  a  sound  financial  basis. 

A  resume  of  the  personnel  of  the  Directorate  of  the 
Board  may  not  be  out  of  place  at  this  juncture.  The 
Chairman,  naturally  enough,  was  the  Federal  Food 
Administrator,  Herbert  C.  Hoover;  George  M.  Rolph, 
the  president,  had  been  chief  of  the  Sugar  Division 
of  the  Food  Administration  since  its  formation.  Previous 
to  his  connection  with  the  Food  Administration  he  was 
general  manager  of  the  California  and  Hawaiian  Sugar 
Refining  Company  at  Crockett,  California,  and  he  re- 
signed from  this  position  in  order  to  enter  the  national 
service  without  compensation.  George  A.  Zabriskie 
of  the  Produce  Exchange  of  New  York  City  had  been 
with  the  Food  Administration  since  December  12,  1917, 
in  charge  of  wholesale  and  retail  flour  distribution.  On 
June  25,  1918,  he  was  appointed  Chief  of  the  Distribution 
Division  of  the  Food  Administration  and  both  flour  and 
sugar  distribution  were  attended  to  from  his  office. 
Wm.  A.  Glasgow,  Jr.  of  Philadelphia  had  been  con- 
nected with  the  Food  Administration  as  its  chief  counsel 
since  January,  1918.  Dr.  Frank  W.  Taussig,  Professor 
of  Political  Economy  at  Harvard,  was  chairman  of  the 
Tariff  Commission  at  Washington.  Theodore  F.  Whit- 
marsh  had  been  connected  with  the  Food  Administra- 
tion since  August  16,  1917.  Clarence  M.  Woolley  was 
one  of  the  Directors  of  the  War  Trade  Board.  It  will 
be  noted  that  none  of  the  Directors  had  any  connection 
with  the  sugar  trade  and  all,  of  course,  served  on  the 
Board  without  compensation. 

The  legal  preliminaries  over,  the  next  step  was  an 


INCORPORATION  AND  ORGANIZATION  47 

arrangement  for  an  efficient  organization  to  handle  all 
the  intricate  detail  necessarily  involved  in  the  control 
of  an  industry  of  nation-wide  scope.  The  basic  principle 
was  the  utilization  of  existing  agencies  previously  created 
in  the  Food  Administration  dealing  directly  and  in- 
directly with  sugar  problems.  The  chart  on  the  fol- 
lowing page  gives  graphically  the  general  plan.  The 
Cuban,  the  Hawaiian,  the  Porto  Rican,  the  beet-sugar 
and  the  Louisiana  producers  all  had  previously  had  com- 
mittees or  representatives  to  act  as  media  between 
themselves  and  the  Food  Administration,  while  the 
American  Refiners'  Committee,  which  had  the  task  of 
carrying  out  the  details  of  the  provisions  of  the  refiners' 
contract  with  the  Food  Administration,  had  functioned 
as  the  representative  body  for  the  American  refiners. 
The  Sugar  Division  of  the  Food  Administration,  headed 
by  Mr.  Rolph,  who  was  at  the  same  time  President  of 
the  Board,  occupied  a  central  position  in  contact  with  the 
representatives  of  all  the  above  producers,  sugar  manu- 
facturers, and  refiners. 

This  Sugar  Division  was  the  Clearing  House  where 
all  problems  were  handled  in  relation  to  supplies,  prices, 
and  distribution  of  sugar  from  manufacturers  and  re- 
finers. Important  questions  of  general  policy,  which 
arose  constantly,  were  referred  by  the  Chief  of  the  Sugar 
Division,  Mr.  Rolph,  to  Directors  of  the  Sugar  Board 
for  decision.  Problems  of  distribution  from  jobbers 
and  wholesalers  on  to  the  retail  trade  were  to  be  handled 
by  the  Distribution  Division  of  the  Food  Administration 
under  Mr.  Zabriskie.  Subsequently  a  "certificate" 
scheme  of  distribution  was  set  up  which  involved  the 
utilization  of  the  offices  of  all  State  Food  Adminis- 
trators throughout  the  United  States.  In  determina- 
tion of  policies,  frequent  recourse  was  essential  to 
statistical  data  on  costs  of  sugar  production,  supply 
and  consumption  of  sugar  in  all  the  countries  of  the 
world,  import  and  export  data,  etc.  The  Board  utilized 


48 


GOVERNMENT   CONTROL  OF  SUGAR 


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INCORPORATION  AND   ORGANIZATION  49 

for  this  the  sugar  section  of  the  Statistical  Depart- 
ment of  the  Food  Administration,  which  had  been  created 
some  time  previously.  Similarly,  the  Legal  Depart- 
ment of  the  Food  Administration  was  utilized  for  all 
problems  in  that  field. 

Thus  in  all  domestic  questions  executive  machinery 
already  existent  was  utilized.1  For  problems  inter- 
national in  scope  the  International  Sugar  Committee 
was  utilized,  an  organization  created  in  the  latter  part  of 
1917  to  "promote  harmony  in  buying  and  transporting 
raw  sugar  for  the  several  allied  belligerents,  as  well  as 
in  making  allotments  to  neutrals." 

1  Such  various  special  collateral  agencies  as  the  Joint  Committee  on  West 
Indies'  Transportation  of  the  United  States  Shipping  Board  and  the  United 
States  Food  Administration,  the  Committee  on  Army  and  Navy  Sugar  Supply, 
the  Division  of  Coordination  of  Purchase,  etc.,  were  all  utilized  in  their  re- 
spective fields. 


CHAPTER  IV 

MOBILIZATION  OF  THE  SUGAR  INDUSTRY  FOR   1919 
AND   SOLUTION  OF  THE  PROBLEMS   RELAT- 
ING TO  PRICES  AND   DISTRIBUTION 

The  Solution  of  the  Price  Problem 

THE  directors  of  the  Sugar  Equalization  Board  began 
action  looking  towards  an  agreement  on  the  price  of 
sugar  for  1919  by  hearing  the  representatives  of  the 
various  sugar  producers.  The  Cuban  Mission  ap- 
peared before  the  directors  of  the  Board  on  August  9 
and  maintained  their  position,  as  previously  presented 
to  the  Food  Administration,  that  a  price  of  $5.60  per 
100  pounds  was  essential  in  order  to  yield  a  fair  profit  to 
the  Cuban  producer.  The  majority  opinion  of  the  directors 
of  the  Board  was  that  $5.25  per  100  pounds  would  be 
sufficient.  No  agreement  was  then  possible  on  this  basis, 
and  the  Cuban  Mission  was  asked  to  report  to  the  Cuban 
Government  for  further  instructions.  On  the  same  day 
there  appeared  the  representatives  of  the  beet-sugar 
manufacturers,  who  presented  figures  of  costs  and  re- 
quested a  price  for  refined  sugar  at  seaboard  points  of 
not  less  than  9  cents  per  pound.  On  the  following  day 
the  representatives  of  the  Hawaiian  producers  came  be- 
fore the  Board,  submitting  cost  figures  and  urging  that 
the  price  of  their  raw  sugar  be  fixed  at  not  less  than 
7  cents  per  pound,  but  recommending  that  the  price 
be  fixed  at  7^  cents.  On  August  16,  the  Directors 
heard  the  Louisiana  producers,  who  urged  that  the 

50 


MOBILIZATION  FOR   1919  51 

price  of  raw  sugar  be  fixed  at  not  less  than  8  cents  per 
pound.1 

These  hearings  only  served  to  emphasize  what  had 
already  been  made  clear  by  the  cost  investigation  made 
by  the  Food  Administration  and  the  Tariff  Commission. 
The  Cuban  price  of  5.60  cents  per  pound  f.  o.  b.  Cuban 
ports  reflected  a  basic  price  for  raw  sugar  of  only  7.05 
cents  per  pound  at  seaboard  refining  points,  after  freight, 
insurance,  and  duty  were  added.  The  resulting  basic 
price  for  granulated  sugar,  after  adding  the  refining 
margin  of  i-542  cents,  would  have  been  8.59  cents. 
The  price  of  7.05  cents  for  raw  sugar  might  have  been 
satisfactory  to  the  Hawaiian,  who  had  asked  for  a 
minimum  price  of  7  cents  per  pound,  although  even 
they  had  urged  a  price  of  7.50  cents  to  maintain  pro- 
duction, but  would  not  have  been  satisfactory  to  the 
Louisiana  producers,  who  had  requested  a  price  of  8 
cents  per  pound  for  their  raw  sugar.  The  price  for  refined 
sugar  of  8.59  cents  would  have  been  unsatisfactory  to 
the  beet-sugar  producers,  who  had  asked  for  8.82  cents. 

After  some  further  negotiations  with  the  Cuban 
Mission  an  agreement  was  reached.  The  contract3 
was  closed  on  September  13,  1918,  the  price  being 
$5. 50  per  ico  pounds  f.  o.  b.  Cuban  ports.  The  Food  Ad- 
ministration announced  that  the  purchase  had  been 
made  on  behalf  of  the  American,  English,  French,  and 
Italian  governments,  a  departure  from  the  preceding 
year's  contract,  when  the  purchase  was  made  jointly 
by  the  United  States  and  the  Allies,  acting  through 
the  International  Sugar  Committee.4 

1  The  Porto  Ricans  did  not  send  representatives  to  Washington,  since  they 
felt  that  any  price  basis  established  which  would  be  suitable  for  the  beet-sugar 
or  the  Hawaiian  industry  would  be  suitable  also  for  the  Porto  Rican  industry. 

2  Net  cash  basis.  »  See  Appendix,  Exhibit  6,  for  text  of  this  contract. 
^  4  In  December,  the  United  States  Sugar  Equalization  Board  transferred 

without  recourse  to  the  Royal  Commission  on  the  Sugar  Supply,  "an  agency 
duly  authorized  to  act  and  now  acting  in  making  this  purchase  on  behalf  of 
the  Governments  of  Great  Britain  (not  including  Canada),  France,  and  Italy," 
the  rights  of  the  Board  to  one-third  of  the  raw  sugar  purchases  from  Cuba  finder 
the  agreement  noted  above. 


52       GOVERNMENT  CONTROL  OF  SUGAR 

While  the  negotiations  were  being  conducted  with  the 
Cubans,  the  question  of  refiners'  margin  was  also  being 
taken  up.  The  report  of  Mr.  Oscar  Strauss,  who  had 
been  appointed  by  Mr.  Hoover  earlier  in  the  year  to 
investigate  the  cost  of  refining,  was  submitted  to  the 
Board  as  a  basis  for  a  decision.  Mr.  Strauss  had  re- 
ported as  follows : 

(1)  That  the  $1.30  margin  in  existence  from  January  i 
to  July  i,  1918,  gave  a  fair  and  adequate  profit. 

(2)  That  "if  conditions  should  remain  the  same  for 
the  remainder  of  the  year  no  additional  margin  would  be 
justified,  but  that  the  possibilities  of  lack  of  raw  sugar, 
increase  of  wages,  and  in  cost  of  materials,  fuel,  and 
containers  would  have  a  bearing  on  the  proper  decision." 

(3)  "That  since  he  could  not  decide  upon  the  proba- 
bility of  these  contingencies  he  referred  the  settlement 
of  this  matter  to  the  Food  Administration."  1 

The  Board  examined  the  figures  submitted  of  increas- 
ing costs  of  labor  and  materials  and  of  the  probable 
amount  of  raw  sugar  available  for  melting  in  the  period 
August  i,  iQiS-December  31,  1918.  It  was  estimated 
that  the  amount  of  raw  sugar  available  for  refining  for 
this  period  would  be  813,676  long  tons,  an  average  of 
162,735  long  tons  per  month,  as  against  a  total  of 
2,138,954  tons  or  an  average  of  305,565  long  tons  per 
month  for  the  period  January  i -August  i,  1918.  As 
matters  actually  developed,  the  amount  refined  in  the 
period  was  947,128  tons,  which  was  133,452  tons  above 
the  estimate,2  but  still  much  below  the  average  of  the 
first  seven  months  of  the  year.  The  Board  decided  that 
an  increase  hi  margin  was  justified  and  on  August  25, 
the  Food  Administration  announced  that,  dating  re- 
troactively from  August  i,  the  new  margin  would  be 
$1.45  per  hundred  pounds. 

1  News  Release,  No.  1151,  August  25,  igi8. 

*  This  increase  over  the  estimate  is  accounted  for  by  the  final  outturn  of 
the  Cuban  crop,  which  was  3,444,605  long  tons,  against  Willett  &  Gray's  esti- 
mate of  3,200,000  long  tons. 


MOBILIZATION  FOR   1919  53 

With  the  price  for  new  Cuban  crop  sugars  and  the 
refiners'  margin  decided  upon,  a  minimum  basic  price 
for  sugar  was  thus  established,  since  the  new  Cuban 
price  with  duty,  freight,  and  insurance  added,  plus  the 
new  refiners'  margin,  would  net  a  price  for  refined  sugar 
at  seaboard  point  of  8.49  cents.  This  price  would,  of 
course,  have  been  unsatisfactory  to  the  domestic  pro- 
ducers, beet  and  cane,  since  this  price  was  33  cents  per 
hundred  below  the  price  requested  by  the  beet-sugar 
producers  and  $1.05  below  the  price  requested  by  the 
domestic  cane  producers.  Moreover,  on  the  8.49  basis 
there  would  have  been  no  differential  accruing  to  the 
Board  for  financing  the  distribution  of  sugar. 

Accordingly  the  Board  decided  to  adopt  a  basis  of 
9  cents  for  refined  sugar  for  the  whole  country  (8.82 
net  cash) ;  the  differential  of  33  cents1  per  100  pounds  on 
foreign  sugars  to  be  turned  over  to  the  treasury  of  the 
Equalization  Board.  The  whole  plan  was  then  as 
follows : 

CENTS  NET  CASH 

Basic  price  for  refined  sugar,  cane  and  beet,  9  cents  per 

pound       8.82 

Refiners'  margin        1.54 

Basic  price  for  all  raw  sugars,  paid  to  the  Board  by  re- 
finers           7.28 

Margin  to  the  Board .33  1 

Cost  of  raw  sugar  to  the  Board        6.95 

Freight,  insurance,  and  duty        1.45 

Basic  price  for  Cuban  sugars  f.  o.  b.  Cuba     ....  5.50 

An  interesting  feature  in  connection  with  the  es- 
tablishment of  the  uniform  nine-cent  price  was  the 
cooperation  of  the  Sugar  Board  and  the  Food  Ad- 
ministration in  determining  fair  prices  in  the  interests 
of  cattle  feeders  for  a  by-product  of  the  beet-sugar  crop, 
the  beet  pulp.  By  no  means  a  negligible  factor  in  the 

1  As  it  actually  turned  out  in  1919,  the  margin  was  increased  to  38  cents, 
owing  to  some  minor  change  in  freight  rates  and  insurance. 


54 


GOVERNMENT  CONTROL  OF  SUGAR 


cost  of  beet-sugar  production  is  the  income  from  the 
sale  of  this  by-product  and  unless  some  definite  price 
was  fixed  for  it,  some  beet-sugar  producers,  by  raising 
the  price  to  cattle  feeders,  could  at  will  counteract  the 
effect  of  the  stabilized  price  for  sugar,  thus  reaping  un- 
reasonable profits.  Moreover  the  Food  Administration 
was  anxious  to  stimulate  cattle  raising  in  every  possible 
way.  After  some  conferences  with  the  producers  on 
the  matter  and  statistical  investigation  of  the  cost  of 
producing  pulp,  the  Food  Administration  decided  that 
80  cents  per  ton  for  wet  pulp  and  $40  per  ton  for  dry 
pulp  would  be  considered  fair  prices,  and  producers 
were  notified  accordingly. 

It  is  of  interest  to  compare,  as  in  the  following  table, 
the  various  prices  actually  obtained  by  the  producers 
in  the  different  sources  of  supply  with  the  price  they  had 
originally  requested  and  with  the  prices  in  effect  the 
preceding  year : 


PER  CENT  OF 

SOURCE  or  SUPPLY 

TOTAL  PRE- 
WAR CONSUMP- 
TION OF 
UNITED  STATES 

BASIC  PRICES 
REQUESTED 

BASIC  PRICES 
ACTUALLY 
OBTAINED 

BASIC  PRICES 
IN  EFFECT 
PRECEDING 

SUPPLIED  BY 
EACH  SOURCE 

(In  cents  per 

(In  cents  per 

YEAR 

OF  SUPPLY 

pound) 

pound) 

Cuba  (raw  sugar)  . 

49.8 

5.60 

5-50 

4.60 

Hawaii  (raw  sugar) 

13.66 

7  to  7.5 

7.28 

6.005  l 

Porto     Rico     (raw 

sugar)    .... 

8.01 

7  to  7.5  2 

7.28 

6.005  J 

Louisiana  (raw 

sugar)    .... 

'   6.27 

8 

7.28 

6-35 

United  States  beet 

(refined  sugar)    . 

iS-97 

9 

9 

7-3° 

1  This  price  was  increased  to  6.055  on  June  24,  igi8,  owing  to  the  increased 
cost  of  war  risk  insurance. 

2  No  special  price  was  requested  but  it  was  generally  understood  that  the 
Porto  Rican  producers  were  well  satisfied  with  the  price  requested  by  the 
Hawaiians. 


MOBILIZATION  FOR   1919  55 

On  August  29,  1918,  Mr.  Hoover  outlined  the  situa- 
tion to  the  President  of  the  United  States  and  asked  his 
approval  of  the  general  plan  of  action,  in  the  following 
memorandum : 

The  Cuban  Minister,  representing  the  members  of  the  Cuban 
Sugar  Mission,  has  to-day  offered  to  sell  us  the  Cuban  sugar  crop 
for  90  cents  per  hundred  pounds  above  the  price  of  last  year, 
being  about  $5.50  f.  o.  b.  Cuba.  I  am  in  favor  of  accepting  the 
Cuban  proposal,  which  is  an  eve.n  compromise  between  the  ex- 
treme figures  on  both  sides.  In  order  to  make  sure  that  there  is 
no  misunderstanding  in  Cuba  as  to  the  operations  which  we  are 
about  to  undertake  and  which  I  describe  lower  down,  I  have  taken 
the  attached  letter  from  the  Cuban  Minister. 

After  duty,  freight,  refining,  etc.,  this  will  result  in  a  price  of 
this  sugar  seaboard,  ex-refinery,  of  8.66  cents  per  pound. 

I  am  and  I  think  the  country  is  generally  convinced  that  unless 
the  price  of  sugar  is  controlled  it  will,  in  the  face  of  the  present 
shortage,  go  up  to  25  or  30  cents  per  pound  from  the  9  cents  sea- 
board for  refined  that  it  can  be  held.  As  every  cent  is  $80,000,000 
to  our  consumers,  and  confers  extortionate  profits  on  the  pro- 
ducers and  trade,  I  am  sure  we  are  right  in  rigid  control.  We 
have  proved  by  a  year's  experience  that  the  price  can  be  con- 
trolled by  a  mixture  of  commercial  operations  and  voluntary 
agreements. 

As  I  explained  to  you  in  a  previous  communication,  our  problem 
is  extremely  complex  this  year,  because  of  the  greatly  increased 
cost  of  production  of  our  domestic  sugar.  The  careful  investiga- 
tion of  the  beet  industry  by  the  Tariff  Commission  on  our  behalf 
shows  roughly : 

i  if  cents  per  pound  seaboard  refined  will  be  required  to  cover 
100%  producers,  with  a  profit  of  i  cent  per  pound  to  the 
high-cost  producer. 

9  cents  per  pound  will  cover  about  85%  of  producers,  with  a 
minimum  profit  of  i  cent  per  pound. 

8.66  cents  per  pound  (the  Cuban  price)  will  cover  about  72% 
the  producers,  with  a  minimum  of  i  cent  profit. 

7.45  cents  per  pound  (last  year's  price)  will  cover  about  30% 
of  the  producers,  with  a  minimum  profit  of  i  cent  per  pound. 

Much  the  same  economic  situation  applies  to  Louisiana  sugar. 
If  we  make  a  price  of  11.5  cents  per  pound,  seaboard,  for  domestic 
sugars  to  cover  all  producers,  we  will  have  raised  the  price  to  the 
consumer  by  nearly  3  cents  per  pound.  Also  we  will  have  given 
the  low-cost  producers  a  profit  of  several  hundred  per  cent. 


56       GOVERNMENT  CONTROL  OF  SUGAR 

A  further  complexity  arises  from  the  fact  that  sugar  is  sold 
retail  at  the  nearest  one  half  cent  per  pound,  i.e.  10,  10^,  or  n 
cents  per  pound.  The  wholesaler  and  retailer  take  i^  cents  per 
pound,  and  if  the  price,  for  instance,  to  the  retailer  is  9  cents,  he 
takes  10  cents  from  the  customer;  if  it  is  9.15  he  takes  io|. 
Therefore,  it  is  little  use  to  reduce  the  price  so  as  to  come  out 
below  certain  even  figures  or  one-half  figures. 

We  consider  it  fundamental  in  these  times  of  short  shipping  to 
maintain  domestic  production.  Our  plan  is,  therefore,  a  com- 
promise on  the  whole  situation  as  follows : 

First,  we  propose  to  make  the  price  of  refined,  seaboard  basis, 
9  cents  per  pound.  The  Sugar  Equalization  Board  will  buy 
the  Cuban  crop  and  resell  it  to  the  refiners  at  a  profit  of  about 
36  cents  per  hundred,  after  equalizing  sea  freights  to  different 
ports,  thus  leveling  the  Cuban  price  up  to  9  cents,  and  we  will 
make  this  9  cents  seaboard  the  basis  of  domestic  sugars  as  well. 

This  will  result  in :  (a)  An  increase  to  the  consumer  of  about 
i  cent  per  pound  instead  of  3  cents ;  (&)  a  loss  to  some  15  or  20% 
of  the  beet  and  Louisiana  producers. 

Out  of  the  profits  on  Cuban  sugar  we  propose  to  compensate 
losses  to  these  particular  producers.  It  will  eventuate  that  at  even 
9  cents  some  domestic  producers  will  make  extortionate  profits, 
but  they  will  be  fairly  well  taken  care  of  by  the  excess  profits  tax. 
"  There  is  one  feature  of  these  operations  by  the  Equalization 
Board  that  I  am  anxious  shall  be  clearly  understood  by  you, 
and  that  is  the  large  sums  that  will  accrue  to  it  by  our  present 
programme.  We  shall  probably  make  $15,000,000  on  the  36 
cents  from  the  Cuban  crop.  In  addition  to  this,  the  Sugar  Equal- 
ization Board,  as  I  mentioned  to  you,  is  now  in  effect  taking  over 
the  present  stocks  of  sugar  in  refiners'  hands,  in  order  that  when 
we  increase  the  price  of  sugar  by  i  cent  per  pound  in  the  course 
of  the  next  few  days,  there  shall  not  rest  in  the  hands  of  the  Amer- 
ican refiners  the  large  sums  of  money  to  be  earned  from  stocks 
purchased  at  lower  levels,  and  the  Equalization  Board  may  have 
an  income  from  this  source  of  as  much  as  $10,000,000. 

Furthermore,  in  line  with  the  policy  that  we  should  sell  export 
commodities  at  prices  to  neutrals  somewhat  commensurate  with 
the  prices  they  are  charging  us  for  shipping  and  other  commodities, 
and  to  cover  their  depreciation  of  our  money,  the  Equalization 
Board  will  earn  considerable  profit  from  such  exports  of  sugar  to 
neutrals  as  we  make  during  the  next  year.  It  is  possible  that  the 
net  profits  of  this  Board  may,  during  the  next  twelve  months, 
accumulate  to  as  high  as  twenty-five  millions  of  dollars  above 
the  compensation  given  to  domestic  producers,  and  I  mention 
this  for  your  approval  against  any  criticism  that  might  arise  from 


MOBILIZATION  FOR    1919  57 

it.  This  money  will,  of  course,  ultimately  need  to  be  either  dis- 
tributed to  consumers  by  some  device  or  converted  into  the 
Treasury  by  some  arrangement. 

During  the  past  year  we  have  had  a  great  deal  of  difficulty  in 
sugar  distribution  for  the  lack  of  adequate  stocks  in  the  United 
States.  Owing  to  financial  and  other  conditions,  the  refiners 
have  not  been  disposed  of  their  own  interests  to  carry  such  stocks 
and  every  fluctuation  in  the  shipping  condition  jeopardizes  our 
distribution.  I  am  anxious  to  build  up  at  least  a  sixty-day  stock 
in  the  country,  and  our  first  use  of  the  profits  of  the  Equalization 
Board  would  be  to  secure  such  a  stock.  '  It  may  be  that  later  in 
the  year,  when  we  know  our  profit  position  with  accuracy,  we 
can  work  out  some  device  for  a  redistribution  of  these  profits  to 
the  consumer. 

I  have  had  the  advantage  of  the  advice  of  Messrs.  Taussig, 
Rolph,  Whitmarsh,  Zabriskie,  Glasgow,  and  Woolley,  all  of  whom 
I  esteem  as  men  of  the  first  quality  of  commercial  experience  and 


T  would  be  glad  to  know  if  the  above  plan  meets  with  your 
approval.  It  may  be  necessary  for  us  to  vary  it  in  detail  as  is 
essential. 

In  a  note  to  Mr.  Hoover  on  Sept.  2,  1918,  the  President 
expressed  his  approval  of  the  Board's  plans. 

The  only  remaining  problem  was  to  find  a  suitable 
date  for  putting  the  new  plan  into  operation.  Since 
the  new  crop  of  Cuban  sugars  would  not  be  available 
till  December,  there  was  sufficient  time  to  work  out  all 
details  of  the  agreement  with  the  Cubans.  But  the 
new  beet  sugar  was  already  available  in  the  West  and 
it  was  essential,  particularly  in  view  of  the  scant  supplies 
in  the  country,  to  make  an  agreement  with  the  beet- 
sugar  producers  in  order  that  the  1918-19  crop  might 
be  freely  available  for  distribution.  Obviously,  until 
this  agreement  was  reached  and  the  new  price  basis 
established,  beet-sugar  producers  could  not  ship  their 
sugars.  To  put  the  new  price  into  operation  im- 
mediately involved  having  the  ''new  domestic  crop  at 
the  new  price  and  the  old  foreign  crop  at  the  old  price 
in  the  market  at  the  same  time."  *  To  avoid  this  the 

1  News  Release,  No.  1151,  August  25,  1918. 


58       GOVERNMENT  CONTROL  OF  SUGAR 

Board  decided  to  purchase  all  sugars  in  the  refineries 
and  cane-  and  beet-sugar  mills  of  the  United  States,  in- 
cluding all  sugars  in  process  or  in  transit,  at  the  old  price 
of  6.055  cents  per  pound  for  raw  sugar  and  7.35  cents 
for  refined  sugar  and  immediately  to  resell  these  sugars 
to  the  holders  at  the  new  price  of  7.28  cents  for  raw  sugars 
and  8.82  cents  for  refined  sugars.  The  refiners  were  to 
be  allowed  the  increased  margin  of  15  cents  on  all  sugars 
delivered  and  invoiced  from  August  i  to  the  date  when 
the  new  price  was  to  go  into  effect.  Through  this  pro- 
ceeding, the  profit  which  would  otherwise  have  been 
made  by  the  refiners  and  beet-sugar  producers  through 
purchase  at  the  old  price  and  sale  on  the  basis  of  the  new 
price,  was  to  be  absorbed  by  the  Sugar  Equalization 
Board.  The  date  of  this  change  was  to  be  announced 
at  a  future  date. 

On  September  6,  1918,  the  Food  Administration 
announced  that  the  change  would  become  effective  on 
Monday  morning,  September  9.  Wholesalers  and  re- 
tailers were  warned  not  to  average  their  prices,  but  to 
sell  upon  the  old  basis  until  their  stocks  of  the  lower- 
priced  sugars  were  exhausted.  From  September  9  till 
the  end  of  the  year,  the  refiners  purchased  all  their  sugars 
from  the  Sugar  Equalization  Board  at  a  price  of  7.28 
cents  per  pound.  The  Board  absorbed  the  differential 
of  1.225  cents  per  pound  between  this  price  and  the 
6.055  cents  per  pound,  the  duty-paid  price  for  raw 
sugars  of  the  1917-18  crop. 

As  a  result  of  these  various  activities,  the  Board  drew 
revenue  from  three  general  sources  : 

(1)  It  obtained  a  differential  between  the  old  and  new 
price  on   the   refiners'   and   beet-sugar  manufacturers' 
inventory  of  raw  and  refined  sugar  of  September  9, 
1918. 

(2)  It  obtained  a  differential  between  old  and  new 
price  on  all  arrivals  of  old  crop  cane  sugars  after,  Septem- 
ber 9,  1918. 


MOBILIZATION  FOR   1919  59 

(3)  It  obtained  a  differential  of  38  cents  l  on  all  new 
crop  foreign  sugars  (which  began  to  arrive  in  December, 
1918)  between  the  duty-paid  price  of  $6.90  per  hundred 
pounds  for  Cuban  raws  and  the  price  to  refiners  of 
$7.28.  This  differential  would  have  otherwise  gone  to 
the  Cuban  producers  or  refiners. 

'  The  Agreement  with  the  Producers  and  the  Refiners 

Once  having  disposed  of  the  price  problem,  the  road 
was  cleared  for  the  execution  of  agreements  with  the 
various  producers.  The  agreement 2  entered  into  on 
October  24,  1918,  between  the  Sugar  Equalization 
Board  and  the  Cuban  Commission  and  the  agents  of  the 
Cuban  producers  contained  the  following  provisions : 

(1)  Sugars  were  to  be  purchased  for  shipment  to  the 
United  States  at  the  price  of  5.88  cents 3  per  pound 
"cost  and  freight"  to  New  York  or  Philadelphia. 

(2)  Sugars  were  to  be  purchased  for  shipment  to  the 
United  Kingdom,  France,  and  Italy  at  a  price  of  5.50 
cents  per  pound  f.  o.  b.  northern  ports  or  5.45  cents  per 
pound  f.  o.  b.  southern  ports. 

(3)  Shipments  of  sugar  were  to  be  made  immediately 
after  the  beginning  of  the  crop,  not  less  than  2  per  cent 
of  the  amount  to  be  shipped  in  December,  1918,  and  the 
remainder  in  approximately  equal  monthly  shipments 
from  January  to  November,  1919. 

(4)  Provisions  were  made  in  the  agreement  for  broker- 
age, marine  insurance,  lighterage,  and  so  forth. 

By  this  contract  the  Board  had  insured  ample  supplies 
of  raw  sugars  for  the  United  States  and  the  Allies.  The 
second  step  was  to  arrange  for  an  equitable  distribution 
among  the  principal  governments  associated  in  the  war 

1  See  footnote,  page  53  for  explanation  of  change  from  33  cents  to  38  cents. 

2  See  Appendix,  Exhibit  6,  for  text  of  this  agreement,  page  160. 

3  This  price  was  based  on  the  freight  of  38^  cents  per  100  Ibs.  from  north  side 
ports  west  of  and  including  Caibarien  to  New  York  or  Philadelphia.     The 
differentials  between  this  freight  rate  and  the  rate  to  Boston  or  Southern  ports 
were  to  be  added  to  or  subtracted  from  the  basic  price  of  5.88  cents.        *"" 


60  GOVERNMENT  CONTROL  OF  SUGAR 

against  the  Central  Powers.  In  the  previous  year  the 
Allies  had  been  allotted  one-third  of  the  Cuban  crop, 
which  amounted  to  1,076,934  long  tons. 

Although  it  was  generally  assumed  that  the  Cuban 
crop  for  1919  would  be  considerably  above  the  1918 
crop,  the  Board  deemed  it  advisable  to  assign  to  the 
British  Royal  Commission  only  one-third  of  its  rights 
to  the  exportable  crop,  since  it  was  felt  that  in  view  of  a 
possible  rebound  from  the  restrictions  in  effect  during 
the  war,  the  consumption  might  increase  heavily  in  the 
United  States.  An  assignment *  was  therefore  drawn 
up  in  December,  1918,  by  virtue  of  which  the  British 
Royal  Commission  agreed  to  assume  all  duties  and 
obligations  of  the  contract,  without  recourse  to  the 
United  States  Sugar  Equalization  Board,  and  to  act  on 
behalf  of  the  Governments  of  Great  Britain  (excluding 
Canada),  France  and  Italy.  Inasmuch  as  the  refining 
capacity  of  the  United  Kingdom  was  not  sufficient  to 
refine  this  large  quantity  of  sugar,  the  Royal  Com- 
mission was  given  the  right,  at  its  option,  to  have 
a  portion. of  its  share  of  the  Cuban  crop  shipped  to 
the  United  States  and  refined. 

The  next  step  was  to  make  arrangements  with  the 
refiners  of  the  United  States  to  refine  the  raw  sugars 
which  had  been  purchased  by  the  Board.  An  agree- 
ment,2 dated  October  24,  1918,  was  entered  into  be- 
tween the  Equalization  Board  and  the  Food  Adminis- 
trator and  the  refiners  of  the  United  States,  the  chief 
provisions  of  which  were  as  follows : 

(1)  The  refiners  agreed  not  to  purchase  any  sugar 
for  delivery  during  1919,  except  from  the  Equalization 
Board.3 

(2)  The  allocation  of  sugar  to  the  different  refineries 

1  See  Appendix,  Exhibit  n,  for  full  text  of  this  assignment,  page  202. 

*  See  Appendix,  Exhibit  8,  for  full  text  of  this  agreement,  page  176. 

*  Except  such  sugars  of  the  1917-18  crop  as  were  provided  for  under  the 
agreement  of  the  previous  year  and  Hawaiian  sugars  contracted  for  by  some 
of  the  Eastern  refineries. 


MOBILIZATION  FOR   1919  6l 

was  to  be  based  on  a  percentage  scale,  which  was  in- 
corporated in  the  agreement. 

(3)  The  American  Refiners'  Committee,  created  under 
the  terms  of  the  first  contract  between  the  government 
and  the  refiners,  was  continued  to  direct  the  distribution 
to  refineries  of  the  sugar  obtained  by  the  Equalization 
Board. 

(4)  The  refiners  agreed  to  sell  all  their  refined  sugar 
at  a  price  not  to  exceed  1.54  cents  per  pound  above  the 
price  paid  for  raw  sugar  to  the  Equalization  Board. 

(5)  The   Equalization   Board   agreed   to   supply   the 
refiners  with  their  requirements  of  raw  sugar  for  1919 
at  a  price  of  7.28  cents  per  pound. 

(6)  In  event  of  a  decrease  in  the  price  of  sugar  in  1919, 
the  Board  agreed  to  pay  the  refiners  the  amount  of  their 
loss;   in  the  event  of  an  increase  in  the  price  of  sugar, 
the  refiners  agreed  to  pay  the  Board  the  amount  of  their 
gain. 

By  virtue  of  this  contract,  the  Board  provided  for 
refining  the  raw  sugar  it  had  purchased  for  its  own  ac- 
count. In  order  to  provide  for  the  refining  of  the  sugars 
of  the  British  Royal  Commission,  an  option  was  given 
by  the  refiners  of  the  United  States,  with  the  approval 
of  the  Board,  to  have  refined  321,000  tons  of  raws 
(300,000  tons  of  refined)  at  the  rate  of  27,275  tons  of 
refined  per  month,  begin'ning  February  i,  I9I9-1 

All  of  these  arrangements  were  in  relation  to  the 
foreign  supplies  of  raw  sugars.  In  order  to  prevent 
difficulties  which  might  result  from  the  competition  of 
the  foreign  and  domestic  sugars,  it  was  necessary  to  pro- 
vide machinery  of  control  over  the  domestic  pro'ducers. 
On  September  18,  1918,  an  agreement2  with  each  in- 
dividual beet-sugar  producer  was  entered  into  by  Mr. 

1  This  option  was  later  raised  to  535,000  tons  of  raw  sugar,  but  owing  to  the 
unusual  conditions  in  the  last  quarter  of  1919,  part  of  this  amount  was  canceled 
and  only  512,000  tons  were  actually  shipped.     See  Appendix,  Exhibits  12,  13, 
and  23  for  details  of  these  arrangements. 

2  See  Appendix,  Exhibit  9,  for  text  of  this  agreement,  page  188. 


62       GOVERNMENT  CONTROL  OF  SUGAR 

Herbert  C.  Hoover,  the  United  States  Food  Administrator, 
as  had  been  done  in  the  previous  year.  The  main 
provisions  of  these  uniform  agreements  were  as  follows : 

(1)  A  central  "Sugar  Distributing  Committee"  was 
created  to  "direct  the  distribution  of  the  beet-sugar 
crop  in  the  most  economical  and  efficient  method  con- 
sistent with  an  equitable  distribution  of  sugar  where 
needed  throughout  the  United  States."  1 

(2)  Every  producer  agreed  to  abide  by  the  rules  and 
directions  of  the  Sugar  Distributing  Committee  and  to 
sell  at  a  price  not  to  exceed  the  basic  maximum  price  of 
9  cents  per  pound  at  seaboard  refining  points. 

(3)  The    Sugar    Distributing    Committee    was    em- 
powered to  make  a  final  settlement  to  individual  pro- 
ducers at  the  close  of  the  crops  based  on  the  "average 
net  proceeds  per  pound  of  sugar  resulting  from  the  sale 
of  all  sugars,"  2  of  the  1918-19  crop. 

An  agreement 3  of  the  same  character  as  that  with  the 
beet  producers  was  entered  into  by  the  Food  Adpinis- 
trator  and  the  Louisiana  cane-sugar  producers.  A 
committee,  called  the  Louisiana  Sugar  Committee,  was 
created  to  direct  the  distribution  of  Louisiana  sugar, 
under  the  supervision  of  the  Food  Administration.  The 
basic  price  for  raw  sugar  at  customary  Louisiana  re- 
fining points  was  not  to  be  "greater  than  the  price  which 
may  be  found  to  be  just  and  fair  by  the  United  States 
Food  Administrator  and  not  less  than  the  price  of  duty- 
paid  96  degree  Cuban  raw  sugar  delivered  at  such  re- 
fining points."  4  The  minimum  basic  price  for  Louisiana 
raws  was  thus  established  at  7.28  cents  per  pound.  The 
basic  price  for  Louisiana  refined  sugar  was  to  be  the 
price  determined  by  the  Food  Administrator  "under 

1  Agreement  with  the  U.  S.  Food  Administration  as  to  sale  and  distribution 
of  beet-sugar  crop  1918-19,  page  6.     (See  Appendix,  page  188.) 

2  Ibid.,  page  5. 

3  See  Appendix,  Exhibit  10,  for  text  of  this  agreement,  page  195. 

4  Agreement  with  the  United  States  Food  Administration  as  to  Louisiana 
Sugars,  page  5. 


MOBILIZATION  FOR   1919  63 

i 

provisions  of  his  uniform  contracts  with  the  sugar  re- 
finers of  the  United  States,  dated  October  i,  1917." 
For  the  Louisiana  crop  of  1918-19,  this  arrangement 
meant  a  basic  net  cash  price  of  8.82  cents  per  pound. 
Price  differentials  were  established  in  the  agreement  for 
the  many  different  grades  of  so-called  "direct  con- 
sumption" sugars  manufactured  in  Louisiana. 

Solution  of  the  Problems  Relating  to  Supply  and 
Distribution 

The  Food  Administration  began  activities  aiming  at 
an  effective  control  of  distribution  in  the  spring  of  1918. 
On  May  4  it  announced  *  that  all  manufacturers  using 
sugar,  with  the  exception  of  those  making  essential  food 
products,2  were  to  be  restricted  to  80  per  cent  of  the 
preceding  year's  requirements.  Manufacturers  who 
began  business  or  enlarged  their  capacity  after  April  i, 
1918,  also  all  manufacturers  of  nonedible  products, 
with  certain  exceptions,3  were  to  receive  no  allowances 
of  sugar.  The  restrictions  were  to  be  made  effective 
through  the  use  of  a  certificate  system  controlled  by 
the  Federal  Food  Administrators  of  each  state,  who  were 
to  issue  certificates  to  all  manufacturers  upon  receipt  of 
sworn  statement  as  to  requirements.  No  sugar  manu- 
facturer or  distributor  was  to  deliver  sugar  to  any  one 
without  first  receiving  certificates.  All  these  regulations 
were  to  apply  to  the  period  from  May  15  to  July  i.  On 
June  i,  1918,  the  Food  Administration  announced4 
"that  manufacturers  who  now  have  on  hand  sugar  that, 
when  added  to  the  amount  already  used  this  year,  will 
bring  their  quota  above  80  per  cent  of  the  amount  used 
from  January  to  July,  1917,  must  turn  over  the  excess 

1  News  Release,  No.  916. 

1  Included  under  this  head  were  commercial  fruit  preservers  and  packers  of 
vegetables,  milk  condensaries,  jam  manufacturers,  ice  cream  manufacturers 
(to  encourage  maintenance  of  milk  production). 

1  These  exceptions  were  manufacturers  of  tobacco,  explosives,  and  drugs. 

4  News  Release,  No.  985. 


64       GOVERNMENT  CONTROL  OF  SUGAR 

to  their  administrators  at  once,   or  be  prosecuted  as 
hoarders." 

The  second  step  in  the  process  of  obtaining  control 
over  sugar  consumption  was  the  division  of  all  users  of 
sugar  into  five  classes,  denoted  as  A,  B,  C,  D,  and  E. 
Class  A  comprised  all  non-essential  industries.  These 
were  to  be  restricted  for  the  period  July  i-September  30 
to  50  per  cent  of  their  consumption  in  the  corresponding 
months  of  igiy.1  Class  B  included  all  the  industries 
using  sugar  for  preserving  and  canning  fruits  and 
vegetables,  that  is,  the  essential  food  industries.  These 
were  to  be  allowed  their  full  needs.  Class  C  included 
all  public  eating  places  regularly  serving  25  persons  or 
more.  These  were  to  be  allowed  3  pounds  of  sugar  for 
every  90  meals  served  in  the  third  quarter  of  igiy.2 
Class  D  included  all  manufacturers  of  baked  goods,  who 
were  to  receive  70  per  cent  of  their  1917  consumption. 
Finally,  Class  E  included  retailers  and  all  dealers  selling 
sugar  for  direct  consumption,  who  were  to  be  allotted 
their  requirements  based  on  three  pounds  per  customer 
per  month.  This  plan  directed  from  Washington  was 
put  into  operation  by  the  State  Food  Administrators 
through  the  use  of  certificates.  The  retail  grocer  and 
the  other  classes  of  businesses  described  above  received 
from  their  State  Food  Administrators  "Sugar  Dis- 
tribution Certificates"  of  different  quantitative  de- 
nominations, covering  their  sales  of  sugar  to  different 
types  of  customers.  These  certificates  passed  from 
retailer  to  wholesaler  and  from  wholesaler  to  refiner  or 
beet-sugar  manufacturer,  unless,  of  course,  the  retailer 
bought  directly  from  the  refiner  or  manufacturer  of 
sugar.  The  refiner  or  manufacturer  then  returned  these 
certificates  to  the  State  Food  Administrators  who  had 
issued  them. 

1  Manufacturers  of  milk  chocolate,  however,  could  use  75  per  cent  of  the 
amount  of  sugar  used  during  the  third  quarter  of  1917  for  condensed  milk. 

*  The  month  of  June,  1918,  could  be  used  as  a  basis  instead  of  the  third 
quarter  of  1917. 


MOBILIZATION  FOR   1919  65 

The  whole  plan  thus  involved  the  creation  of  a  clerical 
staff  in  each  state  to  attend  to  the  issue  and  cancellation 
of  certificates  and  a  considerable  expense  was  thus  im- 
posed upon  the  offices  of  the  State  Food  Administrators. 
This  expense  was  assumed  by  the  United  States  Sugar 
Equalization  Board  when  it  undertook  the  control  of 
the  entire  plan  shortly  after  its  incorporation.  One  of 
the  directors  of  the  Board,  Mr.  George  A.  Zabriskie,1 
had  already  been  appointed  to  take  charge  of  the  whole- 
sale and  retail  sugar  distribution  for  the  United  States 
and  the  Board  assumed  financial  control  as  well. 

The  whole  scheme  under  the  Board's  jurisdiction 
worked  out  about  as  follows : 

(i)  The  President  of  the  Board  constantly  com- 
municated with  the  Cuban  Producers'  Committee  and 
with  the  Allies,  through  the  offices  of  the  International 
Sugar  Committee,2  and  determined  the  amount  of  the 
Cuban  1917-18  crop  available  for  distribution  to  the 
United  States  after  the  allied  requirements  had  been 
met.  From  the  Statistical  Departments  of  both  the 
International  Sugar  Committee  and  the  United  States 
Food  Administration  and  from  representatives  in  each 
locality  he  received  information  as  to  the  amount  of 
sugar  available  from  other  than  Cuban  sources  of 
supply :  Porto  Rico,  Hawaii,  Philippines,  etc.  The 
Army  and  Navy,  the  Red  Cross,  the  Belgian  Relief, 
the  Y.  M.  C.  A.,  Knights  of  Columbus,  and  other  relief 
organizations  advised  him  of  the  amount  of  sugar  they 
would  require,  and  finally  the  United  States  Shipping 
Board  advised  him  of  the  amount  of  shipping  tonnage 
that  could  be  utilized  to  transport  sugar  to  the  United 
States.  It  was  thus  possible  to  approximate  the  amount 

1  Mr.  Zabriskie  had  been  in  charge  of  flour  distribution  and  on  June  25,  1918, 
the  Food  Administration  announced  that  both  flour  and  sugar  wholesale  and 
retail  distribution  would  be  attended  to  from  his  office,  as  the  distribution 
division  of  the  Food  Administration. 

2  This  was  the  organization  created  in  December,  1917,  to  allocate  the  1917-18 
Cuban  crop  among  the  Allied  Governments  and  to  the  various  refiners  of  the 
United  States. 


66 

available  for  civilian  sugar  distribution  in  the  United 
States  for  each  month. 

(2)  A  scheme  of  equitable  allocation  to  individual 
states  was  then  worked  out  based  on  the  population  of 
each  state,  the  normal  needs  of  each  state,1  and  the  normal 
sugar  deliveries  into  each  state.2 

(3)  Each  State  Food  Administrator  then  was  notified 
as  to  the  amount  available  for  distribution  for  his  state 
each  month  for  all  civilian  purposes.     The  details  of 
the  distribution  within  the  state  under  l^he  certificate 
scheme  were  left  to  the  discretion  of  the  State  Food 
Administrator. 

By  virtue  of  agreements  entered  into  by  the  Food 
Administrator  with  the  Louisiana  sugar  producers  and 
the  beet-sugar  manufacturers,  central  distributing  com- 
mittees were  created  to  handle  the  distribution  of  the 
new  crop  sugars  under  the  direction  of  the  Sugar  Equali- 
zation Board  in  accordance  with  requirements  for  the 
economic  and  equitable  distribution  for  the  country  as 
a  whole,  while  through  the  agreement  with  the  cane- 
sugar  refiners,  the  Board  was  able  to  direct  the  move- 
ment of  sugar  leaving  the  refineries.  Thus  it  was  possible 
to  move  sugars  at  any  one  time  from  regions  of  plenty 
to  regions  of  scarcity,  any  unusual  expenses  incurred 
in  such  movements  being  met  out  of  the  funds  of  the 
corporation.  In  practical  operation  it  was  found  es- 
sential to  divide  the  country  into  zones  of  distribution, 
each  zone  being  supplied  from  the  nearest  and  most 
effective  sources  of  supply  A 

1  Including  the  requirements  of  its  industries  as  determined  from  statistical 
investigation  by  the  State  Food  Administrators.          , 

2  As  reported  by  refiners  and  beet-sugar  manufacturers  to  the  Food  Adminis- 
tration. 

3  The  rules  and  regulations  issued  from  time  to  time  to  beet-sugar  factories, 
refiners,  and  Louisiana  producers  relative  to  distribution  are  too  many  to  discuss 
in  detail  here.     Briefly,  however,  the  general  plan  was  to  increase  the  territory 
of  the  beet-sugar  producers  as  increased  beet-sugar  supplies  became  available, 
while  at  the  same  time  decreasing  the  territory  in  which  cane-sugar  refiners  or 
Louisiana  producers  could  sell  their  sugars,  thus  husbanding  the  available 
supplies  in  regions  of  greater  relative  scarcity. 


MOBILIZATION   FOR   1919  67 

The  scheme  as  outlined  above  was  extremely  effective 
in  the  creation  of  a  rigorous  yet  elastic  control  over 
sugcir  consumption  and  distribution.  The  sugar  ration 
for  household  use  and  the  allowances  to  the  various 
industries  were  changed  from  time  to  time  as  the  out- 
look for  available  supplies  and  shipping  tonnage  changed. 
Thus  for  the  period  from  August  i  to  November  i,  1918, 
the  household  ration  was  fixed  at  2  pounds  per  person  per 
month,  while  for  November  it  was  increased  to  3  pounds. 
The  signing  of  the  armistice  made  it  unnecessary  to 
continue  rigid  control  and  the  certificate  scheme  was 
abandoned  on  December  i,  1919.  More  drastic  restric- 
tions of  non-essential  industries  were  contemplated 
from  November  i  on,  some  of  which  were  put  into  effect 
for  November,  but  the  signing  of  the  armistice  rendered 
such  action  undesirable. 


PART    II 
THE  RECONSTRUCTION   PERIOD 


CHAPTER  V 

ATTEMPTS  AT  "DEMOBILIZATION"  OF  GOVERNMENT 
CONTROL  OF  THE  SUGAR  INDUSTRY 

IT  will  be  noted  that  the  signing  of  the  armistice  in 
November  came  but  a  few  months  after  the  various 
agreements  with  the  producers,  the  creation  of  a  new 
price,  basis,  and  the  establishment  of  an  effective  control 
of  distribution.  Sufficient  time  had  elapsed,  however, 
to  prove  the  practicability  and  soundness  of  the  plan 
of  dealing  with  all  sugar  problems  through  a  Government 
corporation. 

With  the  war  over,  the  general  policy  of  the  Govern- 
ment and  the  logical  procedure,  at  any  event,  was  to 
demobilize  all  organizations  which  had  been  created 
for  war  purposes.  The  attitude  of  the  Directors  of  the 
Board  was  expressed  in  a  resolution  adopted  at  a  meeting 
held  on  January  22,  1919,  which  was  as  follows  : 

In  view  of  the  fact  that  the .  regulatory  conditions  now  in 
effect  were  entered  into  with  the  expectation  of  the  continuance 
of  war  conditions  and  were  not  expected  to  be  maintained  through 
a  long  period  of  peace  conditions,  and  in  view  of  the  change  in 
conditions  since  the  armistice,  a  return  of  free  market  conditions 
in  sugar  would  be  welcomed  by  the  Board. 

In  harmony  with  the  above  resolution,  a  committee 
was  appointed  to  ascertain  whether  any  progress  could 
be  made  in  restoring  normal  conditions  in  the  trade. 
It  was  soon  discovered,  however,  that  the  sugar  in- 
dustry was  unwilling,  in  view  of  all  the  uncertainties 
of  a  reconstruction  period,  to  assume  the  responsibilities 

71 


72       GOVERNMENT  CONTROL  OF  SUGAR 

of  the  Board's  contracts,  if  accompanied  by  necessary 
restrictive  measures  against  exorbitant  profits.  No 
immediate  withdrawal  of  control  was  therefore  possible 
and  the  Board  then  was  obliged  to  adopt  the  policy  of 
gradually  removing,  step  by  step,  the  various  restrictions 
on  the  trade. 

Just  at  this  time  a  reorganization  of  the  Board 
was  effected.  Since  the  first  organization,  there  had 
been  but  one  change  in  the  Directorship.  Mr.  James 
F.  Bell,  formerly  of  the  Milling  Division  of  the  Food 
Administration,  was  elected  Treasurer  of  the  Board  on 
November  4,  1918,  to  take  the  place  of  Mr.  Whitmarsh, 
who  resigned  that  office  on  that  date.  But  after  Jan- 
uary 15  several  notable  changes  occurred. 

First  of  all  on  January  22,  1919,  the  Directors  author- 
ized the  Treasurer  to  move  to  New  York  as  much  of  the 
business  organization  as  possible.  Inasmuch  as  most 
of  the  work  of  the  Board  for  1919  was  to  be  in  relation 
to  the  refiners'  and  Cuban  contracts,  it  was  inevitable 
that  the  executive  offices  should  be  shifted  to  New 
York.  Several  changes  followed  in  the  form  of  or- 
ganization. The  most  important  was  the  liquidation 
of  the  International  Sugar  Committee,  which  was 
replaced  by  the  executive  organization  of  the  Sugar 
Equalization  Board  itself.  Mr.  E.  S.  Keeley,1  formerly 
Secretary  of  the  International  Sugar  Committee,  was 
made  General  Manager  and  Assistant  Treasurer  of  the 
Board.  On  January  22,  Mr.  Bell  tendered  his  resigna- 
tion both  as  Treasurer  and  Director,  which  was  not 
accepted  by  the  Board  till  February  12,  1919,  and  did 
not  become  effective  till  April  19.  The  following 

1  On  August  i,  191  g,  Mr.  Keeley  died  suddenly  following  an  operation  for 
appendicitis.  His  service  had  been  continuous  ever  since  he  became  Secretary 
of  the  International  Sugar  Committee  on  February  9,  1918.  His  death  was 
a  serious  loss  to  the  Board,  owing  to  his  experience  in  dealing  with  problems 
relating  to  the  Government  control  of  the  sugar  industry.  For  the  balance  of 
the  year,  Mr.  E.  H.  Costello,  chief  of  the  Raw  Sugar  Department,  handled 
most  of  the  problems  previously  under  Mr.  Keeley's  jurisdiction.  A  greater 
burden  was  also  imposed  upon  the  executive  officers  of  the  Board,  all  of  whom, 
of  course,  served  without  compensation. 


ATTEMPTS  AT  DEMOBILIZATION  73 

expression  of  appreciation  was  extended  to  Mr.  Bell 
by  the  Directors  of  the  Board  and  spread  upon  the 
records : 

In  accepting  the  resignation  of  Mr.  James  F.  Bell  as  Treasurer 
the  Board  wishes  to  put  on  record  its  high  appreciation  of  his 
services.  After  long  and  exacting  labor  as  Chairman  of  the  Mill- 
ing Division  of  the  Food  Administration,  Mr.  Bell  consented  to 
continue  his  voluntary  labors  by  accepting  the  Treasurership  of 
this  Board.  His  wide  experience,  his  business  ability  and  sa- 
gacity, his  ripe  judgment  have  been  as  helpful  in  this  part  of 
the  Food  Administration's  work  as  in  his  previous  position.  He 
has  organized  the  financial  system  of  this  Board,  and  has  con- 
tributed greatly  to  the  wise  consideration  of  its  general  problems. 
His  service  to  the  country  has  been  without  break  through  the 
war  period,  and  has  been  of  distinguished  character. 

On  January  30,  1919,  the  President,  Mr.  George  M. 
Rolph,  tendered  his  resignation  both  as  President  and 
Director,  to  take  effect  not  later  than  February  15. 
The  sincere  regret  of  the  Board  at  his  resignation  was 
manifested  in  the  following  expression  of  appreciation. 

In  accepting  the  resignation  of  Mr.  George  M.  Rolph  from 
the  Presidency,  this  Board  wishes  to  put  on  record  its  high  ap- 
preciation of  the  services  he  has  rendered  to  the  Food  Adminis- 
tration and  the  Sugar  Equalization  Board,  and  thereby  to  the 
country.  Mr.  Rolph  entered  the  Food  Administration  im- 
mediately on  its  establishment  in  July,  1917,  severing  all  his 
business  connections  and  devoting  all  his  time  and  energy,  at 
great  personal  sacrifice,  to  the  difficult  problem  of  regulating 
this  part  of  the  food  supply.  He  has  remained  at  his  post,  with- 
out rest  or  relaxation,  throughout  the  period  of  war.  His  in- 
timate acquaintance  _with  the  industry,  his  unfailing  attention 
to  every  detail,  his  wide  experience  and  sound  judgment,  proved 
invaluable,  and  were  prime  factors  in  enabling  the  Food  Adminis- 
tration to  conserve  the  sugar  supply  and  to  regulate  price  and 
distribution  with  success.  He  has  continued  to  serve  with  the 
same  fidelity  and  success  on  this  Board.  While  admitting  that 
there  is  no  longer  ground  for  calling  on  him  for  continued  sacri- 
fices, and  reluctantly  parting  with  him,  the  Board  congratulates 
him  and  his  country  on  the  patriotic  spirit  with  which  he  has 
served. 


74       GOVERNMENT  CONTROL  OF  SUGAR 

The  resignation  of  Mr.  Rolph  left  the  Board  without 
a  President.  On  February  12,  Mr.  George  A.  Zabriskie 
was  elected  President  of  the  Corporation  to  succeed 
Mr.  Rolph,  and  Mr.  Whitmarsh  was  elected  Vice-presi- 
dent. On  April  16,  Mr.  E.  A.  De  Lima  was  elected 
Treasurer  following  Mr.  Bell's  resignation  and  on 
March  18,  1919,  Mr.  Edgar  Rickard,  acting  for  the 
Food  Administrator,  who  was  then  abroad,  was  elected 
a  Director  to  fill  the  vacancy  in  the  Directorate  due  to 
Mr.  Rolph's  resignation.  There  were  no  other  changes 
thereafter,  except  that  on  May  22,  1919,  Mr.  Edwin  P. 
Shattuck  was  elected  a  Director  of  the  Corporation. 

With  the  Directorate  and  the  executive  organization 
thus  reorganized,  and  the  offices  of  the  Board  moved 
to  New  York,  all  was  prepared  for  meeting  the  problems 
of  1919. 

Removal  of  Restrictions  on  Sugar  Consumption 

Some  time  previous  to  the  above  reorganization  of  the 
Board  the  first  step  in  the  process  of  liquidation  was 
taken  in  the  removal  of  restrictions  on  consumption. 
This  action  was  essential  not  only  because  it  was  con- 
sistent with  the  policy  of  the  Government  to  remove  all 
restraint  as  soon  as  possible,  but  also  because  the  balance 
of  world  supply  and  demand  appeared  to  require  it. 

It  was  impossible,  of  course,  to  predict  precisely  what 
the  available  supplies  would  be  and  what  the  consump- 
tion would  be  for  the  year.  Countries,  such  as  Germany 
and  Austria,  which  had  curtailed  production  owing  to 
the  exigencies  of  the  war,  might  be  expected  to  approxi- 
mate normal  production  within  six  or  seven  months  and, 
on  the  other  hand,  countries,  such  as  the  United  King- 
dom, which  had  reduced  consumption  severely  owing  to 
the  emergencies  of  the  war  might  be  expected  to  resume 
consumption  at  a  normal  rate.  The  Cuban  crop,  which 
was  counted  upon  to  produce  4,000,000  tons,  might 


ATTEMPTS   AT  DEMOBILIZATION  75 

through  unfavorable  weather  conditions  have  dropped 
to  3,500,000  tons.1 

Mr.  Hoover,  in  his  address  to  the  State  Food  Admin- 
istrators on  November  12,  1918,  gave  the  forecast  as 
follows : 

It  is  very  difficult  to  forecast  with  any  degree  of  accuracy  the 
position  of  sugar.  At  the  present  moment  all  Europe  and  North 
America  are  living  on  much  restricted  allowance.  Our  assured 
supplies  under  the  purchases  we  have  made  are  the  largest  per 
capita  in  the  world.  This  is  not  greediness,  for  we  have  through- 
out the  war  asked  our  Allies  to  supply  themselves  first  and  we 
would  do  with  the  remainder.  They  have  sacrificed  sugar  to 
provide  ships  for  other  purposes.  If  we  assume  that  Europe  will 
continue  on  present  rations,  then  the  world  supplies,  now  en- 
larged by  rendering  Java  sugar  available,  are  sufficient  to  provide 
our  entire  normal  consumption.  If  Europe  raises  its  ration  very 
considerably,  there  will  be  a  shortage. 

The  Food  Administration  has  protected  the  fundamental 
supply  to  the  American  people  by  purchasing,  in  conjunction  with 
the  Allies,  the  next  Cuban  sugar  crop.  We  have  made  such 
arrangements  with  the  various  refiners  and  producers  in  the 
United  States  and  with  other  producers  as  will  assure  a  price  of 
nine  cents  a  pound  wholesale  for  sugar  during  the  next  twelve 
months.  This  price  compares  with  from  twelve  to  twenty  cents 
a  pound  in  the  other  sugar-importing  countries. 

As  the  result  of  these  arrangements  and  the  fact  that  Eastern 
sugars  will  be  available,  we  will  need  little  or  perhaps  no  restraint 
on  consumption  after  the  new  Cuban  crop  is  available,  unless,  as 
I  have  said,  the  other  governments  in  the  world  decide  to  con- 
siderably increase  their  present  rations.  I  do  not  think  our  people 
would  want  us  to  maintain  an  extravagant  and  luxurious  use  of 
sugar  in  soft  drinks  and  confectionery  when  there  was  an  actual 
hardship  for  the  necessary  sugar  for  household  use  in  other  coun- 
tries. With  the  present  world  outlook,  we  are  taking  steps  to 
relax  the  restrictions  which  it  was  necessary  for  us  to  impose  on 
consumption  when  we  based  the  outlook  for  the  whole  of  Allies' 
supplies  directly  on  North  American  sugar  alone. 

The  experts  in  the  sugar  trade  varied  in  their  estimates 
of  the  future,  but  nearly  all  urged  that  the  restrictions 

1  Just  such  an  unfortunate  development  has  been  experienced  this  year,  the 
1919-20  crop  being  reported  reduced  from  an  earlier  estimate  of  4,500,000 
tons  to  3,750,000  tons. 


76 


GOVERNMENT  CONTROL  OF  SUGAR 


on  sugar  consumption  in  the  United  States  which  were 
in  effect  at  the  time  of  the  armistice  should  be  removed. 
The  statistical  position  was  also  of  a  nature  to  warrant 
the  removal  of  restrictions.  The  following  table  in- 
dicates the  world's  sugar  position  as  it  appeared  at  that 
time: 

OUTLINE  SHOWING  WORLD  SITUATION  FOR  1919 

Unit :  Short  Tons 

Estimated  exportable  surplus  of  Western 
Hemisphere  for  1919  2,028,000 

Estimated  necessary  imports  of  United  King- 
dom, France,  Belgium,  Italy,  in  1919  .  .  2,546,000 

Required  for  above  Allies  in  1919  to  be  ob- 
tained from  sources  outside  Western 
Hemisphere  518,000 

Required  for  the  rest  of  Europe  (taking  into 
account  the  following  countries:  Russia, 
Holland,  Germany,  Austria-Hungary, 
Sweden,  Spain,  Denmark,  Norway, 
Switzerland,  Roumania,  Serbia,  Bulgaria, 
Greece,  Finland,  and  Portugal)  ....  925,000 

Total  required  for  all  Europe  to  be  obtained 

from  sources  outside  Western  Hemisphere  1,443,000 

Available  from  sources  outside  Western 
Hemisphere  —  from  Java  1918-19  crop  1  450,000 

From  Mauritius  l 220,000 

From  Philippines  *       .......        125,000 

From  Reunion 35,ooo 

Total 830,000 

Deficit 613,000 

Excess  of  world  "carry  over"  stocks  of  sugar 
above  normal  needs,  resulting  from  the 
war  shipping  situation  —  (mainly  in  Java)  900,000 

Net  world  surplus  for  1919 287,000 

The  above  statistical  analysis,  while  showing  the 
world  position,  did  not  indicate  the  special  situation  of 
the  United  States.  A  study  of  the  probable  supplies 

1  Amount  available  after  deducting  usual  exports  to  countries  outside  of 
Europe  and  Western  Hemisphere. 


ATTEMPTS  AT  DEMOBILIZATION 


77 


and  consumption  for  the  United  States,  made  at  this 
time,  revealed  the  following  situation : 

AVAILABLE  SUPPLIES  FOR  1919  IN  THE  UNITED  STATES 


SOUECE 

SHORT  TONS  RAW 
OR  REFINED 

SHORT  TONS 
REFINED 

From  Cuba  1    

2,460,000 

2,2OO,OOO 

From  Hawaii    

?  ^4,000 

516,000 

From  Porto  Rico  

4.O4.OOO 

376,OOO 

From  Philippines  

8l,72O 

76,OOO 

From       miscellaneous       foreign 
sources     

24,0  SO 

23,2OO 

From    domestic    cane     (mostly 
direct  consumption)   .... 
From  domestic  beet  

245,000 
7-27,000 

245,000 

737.OOO 

Total  all  sources     .... 

4,506,670 

4,263,000 

Prewar  consumption 3,920,000 

Record  consumption 4,160,000 

Surplus  consumption  for  1919  above  prewar  normal  usage    343,000 


All  available  evidence,  therefore,  indicated  the  ad- 
visability of  the  gradual  removal  of  the  restrictions  on 
consumption.  A  contributory  influence  was  the  pressure 
from  the  country  generally  to  demobilize  all  war  organ- 
izations. The  Food  Administration  scheme  of  restriction 
on  sugar  consumption  involved  the  upkeep  of  an  organ- 
ization in  every  state  to  handle  the  details  of  the  ration- 
ing system.  No  one  could  then  have  justified  its  existence 
in  the  face  of  indisputable  statistical  and  expert  evidence 
that  it  would  not  be  required ;  yet,  as  the  condition  of 
abnormal  demand  developed  after  June,  1919,  the 
value  of  this  restrictive  mechanism  became  manifest. 

At  a  meeting  of  the  Board  of  Directors  on  November 

1  Amount  avaikble  for  the  United  States  after  deducting  portion  of  crop  to 
be  shipped  to  Europe  and  Canada. 


78       GOVERNMENT  CONTROL  OF  SUGAR 

12,  1918,  the  Chairman  of  the  Board  was  empowered 
to  relax  the  restriction  on  domestic  consumption  to  the 
extent  that  he  deemed  safe.  The  first  step  was  to 
relieve  the  housewife,  and  the  household  ration  was 
therefore  increased,  while  the  entire  certificate  plan 
was  abandoned  on  December  i,  1918.  In  order  to 
provide  for  the  Eastern  States  until  new  crop  cane 
sugar  could  arrive,  it  was  necessary  to  restrict  deliveries 
from  North  Atlantic  refineries  to  the  territory  east  of 
the  Buffalo-Pittsburgh  line  and  8oth  meridian  and 
north  of  the  Virginia-North  Carolina  boundary,  until 
January  20,  1919.  On  January  26,  1919,  all  remaining 
special  regulations  governing  manufacturers  and  refiners 
of  sugar  were  annulled,  and  after  this  date  manufac- 
turers and  refiners  were  subject  only  to  the  general 
regulations  for  licensees  under  the  provisions  of  the 
Food  Control  Act  and  to  those  restrictions  embodied  in 
the  contracts  existing  between  them  and  the  United 
States  Food  Administration  and  the  United  States  Sugar 
Equalization  Board. 

Arrangements  for  Exports 

The  second  step  in  the  process  of  returning  the  sugar 
market  to  normal  conditions  was  the  provision  made 
for  exports  of  sugar  from  the  United  States.  Ever 
since  September,  1917,  the  War  Trade  Board  had  main- 
tained an  export  embargo  on  sugar  and  this  body  co- 
operated with  the  Food  Administration  in  limiting 
exports  during  1918  to  the  Allies  and,  in  special  cases, 
to  certain  neutrals.  Between  the  outbreak  of  the 
Great  War  and  September,  1917,  the  refiners  had  de- 
veloped a  large  export  trade,  mainly  because  of  the 
blockade  of  the  Central  Powers,  which  countries  had 
a  large  beet-sugar  export  trade  in  prewar  times.  The 
following  figures  indicate  the  changes  in  the  sugar  export 
trade  of  the  United  States  from  1914  through  1918 : 


ATTEMPTS  AT  DEMOBILIZATION  79 

FISCAL  YEAH  QUANTITY  EXPORTED 

ENDING  JUNE  30  '     (Short  Tons) 

I9H 25,448 

IQIS 274,504 

I9l6 815,075 

1917 624,454 

1918 288,208 

With  the  war  over  it  was  advisable  to  restore  the 
large  export  trade  in  order  that  the  refineries  of  the 
United  States  should  be  utilized  at  full  capacity,  thus 
giving  continuous  employment  to  American  capital  and 
labor.  The  arrangements  by  which  535,000  tons  of  raw 
sugars  out  of  the  allied  portion  of  the  Cuban  crop  were 
to  be  refined  on  toll  in  the  United  States  have  been 
explained  above.  This  transaction,  in  itself,  was  of 
sufficient  magnitude  to  approach  the  level  of  the  previous 
record  years  for  exports. 

But  with  most  of  the  world  on  short  rations,  it  was  to 
be  anticipated  that  there  would  be  heavy  pressure  by 
European  countries  upon  the  United  States  and  Cuba 
for  supplies  during  1919  in  addition  to  these  toll  sugars. 
The  pressure  upon  Cuba  was  in  evidence  early  in  the 
year.  The  contract  with  the  Cuban  Commission  for 
the  purchase  of  the  Cuban  crop  provided  for  the  sale  to 
the  United  States  Sugar  Equalization  Board  of  all  raw 
sugar  in  the  island  of  Cuba  except  that  actually  used 
for  local  consumption  in  Cuba.  But  in  January,  1919, 
the  Cuban  Government  asked  that  some  provision  be 
made  for  the  sale  of  small  quantities  of  sugar  to  certain 
governments,  such  as  Uruguay,  "as  a  matter  of  cour- 
tesy and  good  will  for  the  disinterested  cooperation 
which  the  government  (Cuban)  has  given  in  the  matter 
of  Cuba's  sugar  production  for  the  Allies. 'K 

The  Board  was  anxious  to  allow  an  ample  margin  of 
supplies  above  the  normal  consumption  of  the  United 
States,  but  on  the  other  hand,  inasmuch  as  Cuba  was  the 
great  reservoir  for  the  world's  sugar  supply,  it  was 


80       GOVERNMENT  CONTROL  OF  SUGAR 

evident  that  injustice  would  be  done  if  other  countries 
could  not  obtain  even  their  small  quantities  of  Cuban 
raw  sugars  out  of  the  record  crop  of  1918-19. 

On  February  6,  1919,  the  Board  issued  the  following 
notice : 

At  the  earnest  request  of  the  Cuban  Government  the  Equaliza- 
tion Board  has  appointed  a  Committee,  to  be  known  as  the  Cuban 
Export  Committee,  consisting  of  Mr.  Robert  B.  Hawley,  Mr. 
Manuel  Rionda,  members  of  the  Cuban  Commission,  and  Mr. 
Edwin  P.  Shattuck,  to  act  in  behalf  of  the  Equalization  Board  in 
the  matter  of  shipments  of  raw  sugar  direct  from  Cuba  to  nations 
other  than  the  United  States  and  those  represented  by  the  Royal 
Commission  on  the  Sugar  Supply.1 

Exports  by  the  Committee  will  be  regulated  from  time  to 
time  by  the  United  States  Sugar  Equalization  Board,  Incv  and 
will  be  dependent  upon  the  national  requirements  of  the  United 
States,  due  regard  being  given  to  the  necessities  of  other  nations. 

These  arrangements  are  made  at  the  earnest  request  of  the 
Cuban  Government  in  order  that  it  may  continue  its  reciprocal 
trade  relations  with  countries  that  have  in  the  past  carried  on 
commercial  intercourse  with  the  Republic  of  Cuba. 

The  total  amount  of  the  Cuban  1918-19  crop,  thus 
disposed  of  during  the  entire  year,  was  182,815  tons, 
distributed  as  follows : 

QUANTITY  (LONG  TONS)  , 
DESTINATION  Raw  and  Refined 

France 56,363 

French  Africa        ......  3,183 

Canada         73,809 

Holland        5,986 

Turkey .     .  5,537 

Mexico         1,429 

Roumania 4,000 

Greece          1,476 

Spain       30,902 

Panama        130 

Total         .     .-S   .     .     .     .  182,815 

Of  these  182,815  tons,  133,603  tons  were  actually 
subtracted  from  the  United  States  portion,  the  other 

1  Later  in  the  year  France,  although  represented  on  the  Royal  Commission, 
was  allowed  56,363  tons  from  Cuba. 


ATTEMPTS  AT  DEMOBILIZATION  8l 

49,212  tons  being  practically  embargoed  by  the  Cuban 
Government  for  sales  to  certain  countries  with  which  it 
wished  to  continue  trade  relations.  It  will  be  noted 
that  Canada  and  France  together  received  about  71 
per  cent  of  the  total,  while  Spain  received  about  16  per 
cent.  The  balance  was  distributed  among  many  Euro- 
pean countries  in  relatively  negligible  quantities. 

The  Sugar  Equalization  Board  and  the  Food  Adminis- 
tration did  not  deem  it  advisable  to  allow  exports  of  re- 
fined sugar  from  the  United  States  until  February  i,  1919, 
(except  such  Cuban  sugars  of  the  old  crop  as  were  being 
refined  for  the  British  Royal  Commission  on  the  Sugar 
Supply),  because  up  to  that  time  the  demand  for  sugar 
in  the  United  States  was  equal  to  the  available  supply. 
But  by  February  i  it  was  clear  that  sufficient  supplies 
were  forthcoming  to  more  than  meet  all  needs,  for  the  first 
half  of  the  year  at  least.  Allowing  for  a  consumption 
considerably  above  normal  in  the  United  States,  say 
about  3,800,000  long  tons  1  (against  a  previous  average 
of  about  3,500,000  long  tons)  there  remained  a  balance 
for  export  of  about  300,000  tons,  since  the  available 
supplies  for  the  year  were  set  at  about  4,100,000  tons. 
Moreover,  aside  from  this  favorable  statistical  position 
at  this  time,  there  was  a  general  attitude  of  conservatism 
on  the  part  of  the  buyers,  and  refiners  had  difficulty  in 
disposing  of  their  sugars  to  the  domestic  trade.  The 
market  letters  at  this  tune  were  filled  with  complaints 
on  the  slow  movement  of  refined  sugar  all  over  the 
country. 

On  January  n,  1919,  the  United  States  Sugar  Equal- 
ization Board  issued  the  following  announcement : 

The  United  States  Sugar  Equalization  Board,  Inc.,  feel  that 
they  can,  beginning  February  i,  release  sugar  for  export.  The 
amount  to  be  exported  will  be  governed  by  the  receipt  of  raw 
sugars.  The  price  basis  to  be  the  domestic  basis  of  refined  granu- 
lated, 9  cents  per  pound,  less  2  per  cent  discount,  less  drawback  of 
1  Refined  basis. 


82        GOVERNMENT  CONTROL  OF  SUGAR 

i  cent  per  pound,  usual  custom  as  to  payment  by  refiners  of  commis- 
sion, brokerage,  etc.  All  such  export  transactions  subject  to  the 
approval  of  the  United  States  Sugar  Equalization  Board,  Inc. 

Supplementing  this  action,  the  War  Trade  Board 
announced  on  January  18,  that,  after  consultation  with 
the  Food  Administration,  it  had  been  decided  that 
applications  for  licenses  to  export  sugar  to  countries 
outside  of  the  United  Kingdom,  France,  and  Italy, 
would  be  considered  after  February  i.  On  January 
20,  the  President  of  the  Board,  Mr.  George  M.  Rolph, 
in  a  letter  to  the  American  Refiners'  Committee,  author- 
ized the  refiners  to  accept  for  the  months  of  February, 
March,  and  April,  export  business  from  countries  out- 
side those  represented  on  the  Royal  Commission,  up 
to  25,000  tons  per  month.  He  also  advised  the  refiners 
to  accept  the  offer  of  the  British  Royal  Commission  to 
ship  50,000  tons  per  month  in  accordance  with  the 
option  given  to  the  Royal  Commission  on  November 
22,  1918. 

The  above  notice  to  the  American  Refiners'  Committee 
was  only  given  when  the  Board  had  been  assured  by 
the  Shipping  Board  that  there  would  be  no  difficulty 
in  arranging  monthly  shipments  from  Cuba  and  Porto 
Rico  of  a  minimum  of  300,000  tons  per  month.  The 
policy  of  the  Board  in  relation  to  exports  was  thus 
expressed  by  Mr.  Rolph : 

We  believe  that  export  business  should  be  taken,  if  obtain- 
able, in  order  to  keep  the  refineries  of  the  country  operating  at 
full  capacity  in  the  early  months  of  the  year  when  domestic  de- 
mand is  light,  thus  relieving  the  refineries  from  the  necessity  of 
export  business  during  the  summer  and  fall  months  when  do- 
mestic demand  is  heavy. 

It  will  be  noted  that  there  was  no  tendency  as  yet  to 
allow  free  exportation,  but  that  the  Board  still  required 
its  approval  and  the  War  Trade  Board  required  the 
application  for  an  export  license.  Such  caution  was 


ATTEMPTS  AT  DEMOBILIZATION  83 

essential  at  this  time  because  it  was  to  be  anticipated 
that  the  domestic  demand  might  increase  suddenly  at 
any  time. 

Purchase  of  Foreign  Sugars  Other  than  Cuban 

In  normal  times  relatively  small  quantities  of  full-duty 
sugar  come  to  the  United  States  from  the  East  Indies, 
and  Central  and  South  America,  usually  from  enter- 
prises financed  by  American  capital.  The  total  amounts 
imported  from  these  sources  in  the  years  1910  through 
1918  were  as  follows: 

AMOUNT 
YEAR  LONG  TONS 

1910  ..........  120,809 

1911  ..........  220,947 

1912  ..........  85,911 

1913  ..........  21,107 

1914  ..........  42,024 

1915  ..........  115^15 

1916  ..........  154,767 

1917  ..........  89,195 

..........  19,177 


During  1918  the  International  Sugar  Committee  had 
adopted  the  policy  of  allotting  most  of  these  sugars  to 
Canada,  such  an  arrangement  being  advisable  from  the 
viewpoint  of  tariff  differentials  and  shipping.  Accord- 
ingly the  total  amount  received  in  the  United  States 
from  these  sources  fell  to  the  low  figure  of  19,177  tons 
as  compared  with  154,767  in  1916.  It  was  desirable  to 
restore  the  movement  of  these  sugars  to  the  United 
States  in  1919  as  a  reconstruction  measure,  but  early 
in  the  year  the  supplies  already  available  for  the  United 
States  were  so  far  above  requirements  that  caution  was 
imperative.  On  the  other  hand,  the  Board  was  con- 
scious of  the  fact  that  there  might  be  a  large  increase 
in  demand  later  in  the  year  when  the  fruit  preserving 
season  began,  and  any  additional  supplies  available  at 


84 


GOVERNMENT  CONTROL  OF  SUGAR 


that  time  would  be  easily  disposable.  Moreover,  as  the 
world  supplies  hi  the  first  part  of  the  year,  as  explained 
more  fully  below,1  were  more  than  ample,  the  pressure 
upon  the  Board  to  accept  these  sugars  was  rather  heavy, 
particularly  since  American  capital  was  invested  in 
these  countries.  It  was  therefore  decided  by  the  Di- 
rectors to  purchase  these  sugars  as  offers  were  submitted, 
if  the  quantities  so  offered  did  not  become  too  great. 
The  amounts  and  kinds  so  purchased,  were  received  by 
refiners  in  the  United  States  as  follows  : 

Unit :  Long  Tons 


RECEIVED  IN 
MONTH  or 

HAITI 

HON- 
DURAS 

JAVA 

PERU 

SAN 
DOMINGO 

SURINAM 

VENE- 
ZUELA 

TOTAL 

January     . 

214 

1361 

127 

1702 

February   . 

600 

3196 

IOIO 

4806 

March  .     . 

1373 

133 

39°S 

888 

387 

6686 

April     .     . 

1188 

2995 

2400 

32 

3025 

9640 

May      .     . 

1332 

2O2 

3069 

292 

4895 

June      .     . 

399 

1667 

2066 

July.    .    . 

811 

811 

August  .     . 

1821 

1821 

September 

October 

November  . 

1266 

1266 

December  . 

946 

157 

983 

2086 

Total  . 

3893 

6575 

9974 

5503 

1423 

920 

7491 

35779 

It  will  be  observed  that  the  total,  although  con- 
siderably below  the  record  of  previous  years,  was  almost 
twice  as  great  as  in  1918 ;  at  any  rate  a  good  beginning 
had  been  made  in  the  restoration  of  prewar  conditions 
in  this  regard. 

1  See  page  88. 


CHAPTER  VI 

TEMPORARY  ARREST  OF  PROCESS  OF 
DEMOBILIZATION 

THE  gradual  removal  of  restrictions  was  thus  proceed- 
ing satisfactorily  when  conditions  in  the  world  sugar 
market  and  economic  and  political  conditions  in  the 
United  States  caused  a  halt.  It  is  pertinent,  at  this 
point,  to  contrast  the  condition  of  the  sugar  industry  in 
the  United  States  at  the  beginning  of  the  reconstruction 
period  with  the  situation  in  other  industries.  It  will 
be  recalled  that  about  this  time  there  was  a  great  un- 
certainty as  to  price.  It  was  not  known  whether  the 
price  level  of  all  commodities  would  decrease  or  increase 
generally  during  the  year  1919,  and  this  uncertainty 
was  hampering  industrial  progress.  In  fact,  a  Govern- 
ment organization 1  was  created  with  the  President's 
approval  to  attempt,  if  possible,  a  general  stabilization 
of  prices. 

During  this  period  of  uncertainty,  the  sugar  industry 
in  the  United  States  was  almost  completely  undisturbed. 
The  price  of  sugar  was  definitely  known  both  for  refined 
and  raw;  the  Cubans  knew  what  price  to  expect  for 
their  raw  sugar  for  the  whole  year's  crop ;  the  Porto 
Ricans  and  the  Hawaiians  knew  what  their  price  would 
be  for  their  crops;  the  beet-sugar  producers  and  the 
Louisiana  cane  producers  knew  also  what  their  price 
would  be ;  the  refiners  knew  what  their  margin  would 
be  for  performing  the  work  of  refining,  and  even  the 
wholesalers'  and  retailers'  margins  were  controlled 

1  The  reference  here  is  to  the  Industrial  Board,  initiated  early  in  March  by 
the  Department  of  Commerce. 

85 


86       GOVERNMENT  CONTROL  OF  SUGAR 

within  definite  bounds.  Thus,  there  was  no  opportunity 
for  speculation  or  uncertainty.  Refiners  knew  that 
with  the  Cuban  crop  already  purchased  by  the  Board, 
there  would  be  no  difficulty  in  obtaining  supplies. 

Sugar,  which  came  continuously  from  the  various 
sources  of  supply  to  the  United  States,  was  prepared 
and  distributed  for  consumption  without  any  inter- 
ference. The  reaction  from  the  war  restrictions  on 
consumption  brought  about  a  rather  increased  demand 
for  sugar,  but  there  was  more  than  a  sufficient  supply 
available  to  meet  all  needs.  Refiners  were  melting 
sugars  at  capacity,  giving  continuous  employment  to  all 
connected  with  the  industry  and  labor  unrest  was 
negligible,  owing  to  the  fact  that,  with  a  stabilized 
Government  price  for  sugar,  there  was  no  speculation 
and  no  fluctuations  in  price  to  provide  fertile  soil  for 
industrial  agitation.1  Through  a  complete  statistical 
machinery  from  the  point  of  production  to  .the  point 
of  consumption,  such  as  was  necessitated  by  the  rigorous 
Government  control  of  the  industry,  it  was  possible  to 
tell  each  week  the  total  tonnage  of  ships  that  were  clear- 
ing from  the  sources  of  supply;  the  amount  received 
each  week  in  the  United  States  at  each  refinery  and  the 
amount  refined  and  distributed  therefrom ;  the  amount 
of  beet  sugar  that  was  distributed  each  month,  the 
amount  of  exports,  the  stocks  on  hand  and  all  other 
information  which  was  needed  for  administrative 
purposes. 

Generally,  then,  the  condition  in  the  sugar  industry 
was  one  of  stability,  whereas  on  the  other  hand  in 
nearly  all  other  industries  there  was  a  condition  of 
disturbance  and  unrest.  But  this  pacific  status  did  not 
continue,  for,  early  in  1919,  conditions  in  the  sugar 
market  of  the  United  States  began  to  reflect  the  con- 

1  While  there  was  no  unrest  in  the  sugar  industry  at  this  time  in  the  United 
States,  there  was  a  strike  of  railroad  workers  in  Cuba,  which  for  a  time  threat- 
ened to  delay  the  movement  of  sugar. 


TEMPORARY  ARREST  OF  DEMOBILIZATION          87 

ditions  in  the  world  sugar  market  and  the  general  eco- 
nomic and  political  disturbances  in  the  United  States. 
It  is  important  to  review  these  phenomena  briefly  in  so 
far  as  they  were  pertinent  to  the  problems  of  the  Sugar 
Board. 

General  Conditions  in  the  Sugar  Markets  of  the  World 

The  World  War  affected  many  industries  profoundly 
but  there  was  hardly  any  industry  so  disturbed  as  the 
sugar  industry.  The  curtailed  production  of  the 
European  beet-sugar  countries ; l  the  partially  com- 
pensatory increased  production  of  cane-sugar  countries, 
particularly  Cuba  and  Java ; 1  the  loss  of  the  immense 
beet-sugar  trade  with  the  United  Kingdom  by  the 
Central  Powers  to  the  advantage  of  Cuba  and  the 
United  States ; 1  the  continued  world  shortage  of  sugar,1 
compelling  the  rigorous  Government  control  of  the 
sugar  industry  and  trade  in  most  countries ;  —  all  these 
are  familiar  facts. 

Reflecting  these  war  distortions,  the  first  recon- 
struction year,  1919,  revealed  all  sorts  of  unexpected 
turnings  in  the  sugar  markets  of  the  world,  as  might 
have  been  anticipated.  The  statistical  position  at  the 
time  of  the  armistice  showed  insufficient  supplies 
available  from  the  expected  production  for  1919  to  meet 
the  probable  requirements  for  the  year.2  Owing  to  the 
war  shipping  situation,  however,  large  stocks  had 
accumulated  in  Java,  and  the  world's  "carry  over" 
was  approximately  900,000  tons  in  excess  of  the  prewar 
normal.  These  stocks  could  be  utilized  to  meet  the 
deficit  in.  production,  thus  making  a  close  balance 
between  probable  supply  and  demand,  taking  into 
consideration  the  year  as  a  whole. 

But  if  the  year  were  broken  up  into  significant  halves, 
the  situation  was  somewhat  different,  for  the  war  had 

1  See  Appendix,  Exhibits  27,  28,  and  29  for  details. 

*  See  table,  page  76,  for  details  of  world  supplies  and  requirements,  in  1919. 


88 


GOVERNMENT  CONTROL  OF  SUGAR 


brought    about    a    peculiar    maladjustment    between 
supply  and  demand  as  the  following  table  indicates : 

SUGAR  CROPS  or  THE  WORLD,  1916-17,  1917-18,  1918-19 
By  Periods  of  Production.     Unit:  Long  Tons 


PERIODS  or 
PRODUCTION 

PERIOD  1 
WHEN  AVAIL- 
ABLE 

1918-19 

1917-18 

1916-17 

1914-16 

July-Feb. 

crops 
(mostly 
beet) 
Dec.-July 

Aug.-  Jan. 

5,439,783 

S,923,98l 

6,745,094 

9,182,072 

crops 
(mostly 
cane) 

May-Nov. 

Jan.-July 

8,500,980 

8,934,694 

8,100,783 

6,944,679 

crops 
(mostly 
cane) 

May-Dec. 

2,409,637 

2,474,280 

2,142,098 

2,106,665 

Total,  June 
through 
June  '    . 

16,350,400 

17,332,955 

16,987,975 

18,283,416 

Thus  in  prewar  times  about  one-half  of  the  world's 
production  was  cane,  the  other  one-half  beet.  The  cane- 
sugar  countries  produced  mostly  in  the  period  of  the 
year  from  December  through  July,  while  the  beet- 
sugar  factories  produced  from  July  through  February,  and 
Nature  had  thus  established  an  equilibrium  between  pro- 
duction and  consumption.  But  while  the  war  caused  a 
decline  in  beet-sugar  production  of  nearly  half  of  normal,  it 
increased  cane-sugar  production  only  partially,  so  that 
the  net  result  was  an  increase  in  the  supply  in  the  period 
from  January  to  July  of  about  1,500,000  tons  but  a 
decrease  of  about  3,700,000  tons  in  the  supply  from 
July  to  January. 

1  That  is,  the  period  when  the  large  deliveries  for  consumption  take  place. 


TEMPORARY  ARREST  OF  DEMOBILIZATION          89 

Accordingly,  while  statistically,  figures  for  the  year's 
production  and  consumption  of  beet  and  cane  taken  as  a 
whole  showed  a  small  surplus  for  1919  (as  in  the  table 
on  page  76),  assuming  the  utilization  of  the  excess 
"carry  over,"  there  was  strong  probability  of  a  world 
shortage  in  the  last  half  of  the  year  owing  to  the  im- 
practicability of  storing  the  excess  supply  of  the  first 
half  of  the  year  for  use  hi  the  latter  half.  But  there 
developed  during  1919  several  changes  from  the  earlier 
estimate  of  the  year's  supply  and  demand,  which  reduced 
the  world's  margin  even  further.  The  first  striking 
change  was  the  rapid  disappearance  of  the  Javan 
surplus. 

The  reduction  of  consumption  of  Europe,  and  the 
stringent  shipping  situation  during  the  war  had  forced 
Europe  to  turn  to  Cuba  for  supplies  of  sugar,  and  the 
Javan  crops  had  remained  unsold  until  the  latter  part 
of  1918,  at  which  time  there  was  a  decided  change.  In 
his  report  to  the  State  Department,  the  American 
Consul  at  Batavia,  Java,  reported  on  March  25,  1919, 
that  there  were  only  about  2,000,000  piculs  (136,000 
short  tons)  unsold  at  the  end  of  the  year  1918.  This 
situation  resulted  from  the  formation  of  two  organizations 
in  the  latter  part  of  1918  to  relieve  the  situation.  One 
was  called  the  Associated  Java  Sugar  Producers,  the 
other  the  Java  Sugar  Exporters'  Association.  Through 
these  organizations,  about  10,500,000  piculs  (714,000 
short  tons)  of  the  1918  crop  were  sold,  as  well  as  the 
balance  of  the  1917  crop  which  had  not  been  disposed 
of  to  that  time.  During  the  last  two  months  of  1918, 
after  the  armistice  had  been  signed  and  the  shipping 
situation  began  to  look  brighter,  another  6,000,000 
piculs  (408,000  short  tons)  were  sold,  and  thus  a  total 
of  25,500,000  piculs  (1,734,000  short  tons)  were  disposed 
of.  The  stocks  of  sugar  hi  other  hands  were  relatively 
small  so  that  the  Javan  supplies  had  practically  dis- 
appeared by  the  end  of  the  year.  The  exports  from 


90       GOVERNMENT  CONTROL  OF  SUGAR 

Java  were  unusually  heavy  in  the  latter  part  of  1918 
and  the  first  part  of  1919,  reflecting  the  large  sales  just 
noted.  Not  only  did  the  old  crop  thus  disappear,  but 
it  was  even  reported  in  the  early  part  of  1919  that  much 
of  the  new  crop  which  was  not  yet  harvested  was  being 
contracted  for.  Market  letters  of  February,  1919, 
reported  that  about  one-half  of  the  crop  had  been  con- 
tracted for  at  a  basis  of  4.29  cents  f.  o.  b.  Thus  the 
surplus  "carry  over,"  which  in  the  estimates  at  the  time 
of  the  armistice  had  been  counted  on  to  meet  the  deficit 
of  production,  rapidly  disappeared  because  of  an  un- 
expected decline  in  the  crops  of  the  Far  East. 

The  second  striking  development  in  the  world's 
sugar  market  was  the  decline  in  many  of  the  sugar  crops. 
Cables  received  early  in  March  reported  a  decline  for 
the  British  Indian  crop  from  the  early  estimate  of 
2,950,000  long  tons  to  2,337,000  long  tons,  a  drop  of 
over  600,000  long  tons,  and  nearly  one  million  tons  below 
the  preceding  year's  crop.  This  significant  decline 
was  of  importance  not  only  because  of  the  diminution 
of  the  world's  supply  which  it  intrinsically  denoted,  but 
also  because  it  meant  that  there  would  be  that  much 
less  sugar  available  in  Java  for  Europe,  and  a  con- 
sequent heavier  drain  upon  the  Western  Hemisphere. 

There  were  several  other  important  changes  in  the  crop 
figures  during  the  year,  some  favorable  and  some  un- 
favorable. The  table  on  the  following  page  indicates  the 
principal  changes  and  shows  that  the  final  result  of  the 
above  variations  was  to  decrease  the  available  supply  by 
about  600,000  long  tons. 

The  third  important  development  was  the  phenom- 
enal increase  in  sugar  consumption  in  the  United  States, 
due  to  various  causes,  particularly  prohibition  and  the 
restoration  of  the  so-called  "non-essential"  sugar 
consuming  industries  which  had  been  partially  sup- 
pressed during  the  war.  It  became  apparent  in  the 
middle  of  the  year  that  the  consumption  for  the  year 


TEMPORARY  ARREST  OF  DEMOBILIZATION  QI 

Unit:  Long  Tons 


JAN.  1919  FORE- 
CAST or  CROPS 

CROP  FIGURES  AS 
CORRECTED  DEC. 
1919 

United  States  : 
Louisiana      

22  <\,OOO 

12  <C,OOO 

Porto  Rico    

4IO.OOO 

•27  C.OOO 

Cuba       

3,8oo,OOO 

3  ,072.000 

British  India    

2,  O^O.OOO 

2,3^7,OOO 

Formosa  and  Japan        .... 
Philippines        

375,000 
230,000 

4l6,OOO 
150,000 

Total    < 

7.00O.OOO 

7.  •271;  OOO 

Net  decrease 


615,000 


1919  would  reach  over  4,000,000  long  tons  refined  or 
500,000  tons  more  than  normal,  an  increase  of  12%  %. 
The  significance  of  this  great  increase  is  more  readily 
appreciated  when  one  notes  that  the  combined  normal 
consumption  of  Norway,  Denmark,  Spain,  Sweden,  and 
Holland  only  equals  500,000  tons. 

The  net  result  of  the  above  developments  was  the 
emergence  of  a  gap  of  over  a  million  tons  between  supply 
and  demand  for  1919,  as  compared  with  an  estimated 
surplus  at  the  tune  of  the  armistice  of  about  two  hun- 
dred eighty  thousand  tons.  This  shortage,,  however, 
was  not  felt  in  the  first  half  of  1919  because,  as  already 
noted,  this  was  the  period  of  heaviest  production,  and 
the  supplies  available  for  this  period  were  far  in  excess 
of  the  prewar  normal.  The  full  impact  of  this  world 
shortage  came  in  the  last  half  of  the  year,  in  which 
period  the  world  beet-sugar  production  was  not  com- 
pensated by  a  correspondingly  increased  cane  production. 
Moreover,  the  Javan  surplus  " carry  over"  disappeared 
so  rapidly  that  there  was  none  of  it  available  to  alleviate 
conditions  in  the  latter  part  of  the  year. 


92        GOVERNMENT  CONTROL  OF  SUGAR 

Thus  the  world's  sugar  market  during  1919  displayed 
astonishing  lethargy  and  indifference  in  the  first  half  of 
the  year,  while  in  the  second  half  of  the  year  the  reverse 
condition  developed. 

Conditions  in  the  United  States  Which  Obstructed  the 
1 '  Demobilization ' '  Process 

The  above  conditions  in  the  world's  sugar  market 
were  accentuated  by  conditions  in  the  United  States 
which  had  the  same  general  effect.  Reference  has 
already  been  made  above  to  the  remarkable  stability 
of  the  sugar  industry  at  the  beginning  of  the  year,  in 
striking  contrast  to  the  condition  in  other  industries 
at  that  time.  But  this  very  stability,  so  beneficent  and 
desirable  in  many  respects,  had  one  distinct  disadvan- 
tage ;  it  discouraged  the  exercise  of  foresight  on  the  part 
of  dealers  throughout  the  country.  Normally,  in 
the  sugar  trade,  as  in  nearly  all  other  forms  of  business 
enterprise,  there  is  a  speculative  factor,  an  uncertainty 
as  to  the  course  of  future  prices  which  operates  to  create 
large  "invisible"  supplies  all  over  the  country.  For 
there  is  always  the  strong  probability  of  an  increase  in 
the  price  of  sugar  in  the  second  half  of  the  year,  when  the 
heavy  summer  and  fall  demand  sets  in.  But  in  1919, 
with  the  price  fixed  at  a  definite  level  for  the  entire  year, 
through  Government  intervention,  there  was  no  incentive 
to  purchase  for  more  than  immediate  need.  Refiners, 
observing  this  slow  movement  of  their  refined  sugar, 
wrongly  interpreted  it  as  an  indication  of  a  reduced 
consumption,  which  might  ultimately  result  in  a  break 
in  the  market.  The  Board,  therefore,  could  not  at  that 
time  obtain  the  consent  of  the  refiners  to  annul  or 
liquidate  its  contract  with  them,  although  such  annul- 
ment was  absolutely  necessary  if  a  return  to  prewar 
conditions  were  aimed  at. 

Another  unfavorable  factor  was   the  prevalence  of 


TEMPORARY  ARREST  OF  DEMOBILIZATION          93 

industrial  unrest  in  the  country,  which  affected  the 
longshoremen  and  the  shipping  crews.  The  rumors 
of  impending  strikes  along  the  Atlantic  and  Gulf  sea- 
board were  sufficient  in  themselves  to  cause  anxiety  on 
the  part  of  buyers.  These  rumors,  however,  were 
followed  by  actualities,  —  one  strike  lasting  three  weeks, 
—  so  that  buyers  became  exceedingly  worried  at  certain 
times  and  deluged  refiners  with  orders.  In  the  latter 
part  of  the  year,  the  market  was  influenced  by  another 
unfavorable  factor,  the  1920  prospects.  Buyers  were 
beginning  to  turn  their  thoughts  to  the  coming  year's 
supplies  and  prices.  Some  buyers  felt  that  if  the  Govern- 
ment would  continue  control  in  1920  and  purchase  the 
1920  Cuban  crop  as  in  the  year  previous,  there  need  be 
less  concern  about  the  following  year's  supplies  than  if 
there  was  to  be  a  free  market.  On  the  other  hand, 
others  believed  that  without  Government  control, 
refiners  could  best  anticipate  their  future  requirements, 
as  in  prewar  times,  and  purchase  sufficient  quantities 
of  Cuban  raws  for  early  delivery,  say  in  December, 

1919,  or  January,  1920,  and  thus  eliminate  any  anxiety. 
In  either  case,  with  definite  action  to  assure  1920  sup- 
plies taken,  the  market  would  have  exhibited  its  normal 
inactivity  in  the  winter  months,  after  the  heavy  summer 
and  fall  demand  had  been  supplied.    An  official  an- 
nouncement was  therefore  awaited  by  the  sugar  trade 
as  to  the  policy  of  the  United  States  Government  for 

1920.  No  such  notice  was,  however,  forthcoming.     The 
details  of  the  transactions  and  activities  of  the  Board 
in  this  matter  are  given  in  another  chapter.     It  is  only 
necessary  to  note  here  that  the  delay  in  establishing  a 
definite  Government  policy  resulted  in  exciting  buyers 
and  in  a  further  inflation  of  demand  at  the  one  season 
of  the  year  when  supplies  are  always  lowest. 

Accordingly,  the  result  of  the  foregoing  considerations 
was  that  while  in  the  first  half  of  the  year  it  was  im- 
possible to  liquidate  or  annul  the  refiners'  contract 


94  GOVERNMENT  CONTROL  OF  SUGAR 

because  of  the  probability  of  a  sudden  decline  in  the  price 
of  sugar,  in  the  second  half  of  the  year,  it  was  just  as 
impossible  to  accomplish  that  end  because  of  the  exist- 
ence of  an  abnormal  demand  and  an  over-excited  market. 

The  Resultant  Problems  from  A  bove  Conditions 

The  conditions  above  noted,  both  in  the  world  generally 
and  in  the  United  States  specifically,  created  several 
serious  problems,  the  attempts  at  solution  of  which  not 
only  put  aside  for  the  time  being  any  hope  of  releasing 
existing  Government  control  of  the  industry,  but  even 
caused  the  reimposition  of  restraints  already  discarded. 

The  first  problem  was  the  maintenance  of  the  basic 
nine  cent  price,  established  on  September  9,  1918.  In 
the  first  half  of  the  year,  with  refiners'  supplies  ac- 
cumulating, there  was  pressure  to  lower  prices  as  a 
stimulus  to  the  trade  and  to  consumers  to  increase 
purchases.  But  in  the  second  half  of  the  year  with  the 
supplies  available  much  below  the  domestic  demand 
and  with  foreign  countries  clamoring  for  supplies,  just 
the  reverse  was  true  —  it  was  extremely  difficult  to 
hold  the  price  down,  particularly  after  the  sugar  had 
passed  out  of  refiners'  hands.  The  second  problem, 
perhaps  more  trying  than  all  others,  was  the  adjustment 
of  available  supplies  to  the  demand.  In  the  first  part 
of  the  year,  it  was  necessary  to  arrange  for  the  dis- 
position of  a  rapidly  accumulating  surplus,  while  under 
the  conditions  of  "inflated"  demand  in  the  second  half 
of  the  year,  absolute  depletion  of  supplies  was  threatened. 

The  full  impact  of  the  influences  outlined  above  tending 
to  the  creation  of  a  surplus  of  supplies  for  the  first  part 
of  the  year  was  felt  in  the  United  States  by  the  beginning 
of  April.  From  that  point  on,  refiners'  stocks  of  raw 
sugars  began  to  mount  rapidly,  the  maximum  point 
being  reached  on  May  24,  when  stocks  were  230,327 
long  tons  as  compared  with  155,963  tons  on  the  cor- 


TEMPORARY  ARREST  OF  DEMOBILIZATION          95 

responding  date  in  1918.  Several  cargoes  of  Porto 
Rican  sugars  (8,138  long  tons)  arrived  at  Atlantic  ports 
early  in  April  which  refiners  found  themselves  unable 
to  absorb.  In  fact  one  refiner  had  about  $50,000,000 
tied  up  in  his  raw  and  refined  sugar  at  this  tune. 

The  Board  found  itself  confronted  with  two  alter- 
natives :  either  to  reduce  the  basic  price  slightly  in  the 
hope  that  such  action  would  provide  an  incentive  to  the 
trade  to  anticipate  future  needs,  or  to  adopt  a  policy  of 
storing  large  quantities  of  sugar  at  its  own  expense  in 
warehouses  throughout  the  country,  pending  the  tune 
when  the  domestic  and  foreign  demand  would  increase. 
The  former  alternative  was  undesirable,  first,  because 
under  the  abnormal  economic  conditions  of  this  period, 
the  trade  would  have  interpreted  a  decline  in  price  as 
prima  facie  evidence  of  a  weak  market,  so  that  a  result 
opposite  to  the  one  intended  would  have  happened ;  that 
is,  buyers  would  await  a  further  decline  in  price  before 
anticipating  their  summer  requirements.  Secondly,  any 
such  decline  in  price  would  have  been  an  act  of  bad  faith 
and  breach  of  contract  between  the  Food  Administration 
and  the  domestic  producers  of  sugar,  since  the  contract 
with  the  beet-sugar  producers,  drawn  up  under  war 
conditions,  called  for  a  basic  nine  cent  price.  Finally, 
sugar  was  already  selling  at  a  far  lower  price  in  the 
United  States  than  in  any  of  the  countries  abroad  and 
any  further  increase  of  this  differential  was  undesirable 
from  many  points  of  view.  The  Directors,  therefore, 
adopted  the  latter  alternative  and  decided  to  purchase 
surplus  sugars  as  they  came  to  the  United  States  on 
regular  terms,  for  allocation  later  to  the  refiners  when 
the  domestic  demand  improved,  meanwhile  storing  them 
on  lighters  at  the  expense  of  the  Board.  About  $60,000 
was  thus  expended  by  the  Board  in  storage  expenses  be- 
fore the  surplus  Porto  Rican  sugars  could  be  entirely 
disposed  of. 

Meanwhile,  however,  the    continuous    movement   of 


96       GOVERNMENT  CONTROL  OF  SUGAR 

Porto  Rican  sugars  to  the  United  States  was  interrupted 
somewhat,  at  the  peak  of  the  producing  season.  The 
Cuban  producers,  also  at  the  peak  of  production,  were 
anxious  that  more  shipping  be  provided  for  them  and 
pointed  to  that  clause  in  their  contract  with  the  Board 
which  provided  that  two  per  cent  of  the  crop  be  shipped 
during  December,  1918,  "the  balance  in  approximate 
equal  monthly  shipments  from  January  to  November, 
both  inclusive." 

The  Board  then  adopted  the  following  procedure : 
first  of  all,  it  obtained  the  cooperation  of  various  Govern- 
ment bureaus,  the  Department  of  Commerce,  the  War 
Trade  Board,  and  the  State  Department,  so  that  the 
foreign  representatives  of  these  departments  notified 
the  Sugar  Equalization  Board  of  any  possibilities  for  the 
sales  of  either  raw  or  refined  sugar  abroad;  secondly, 
some  raw  sugars  were  sold  to  various  foreign  countries, 
f.  o.  b.  Cuba,  out  of  the  two-thirds  portion  of  the  ex- 
portable crop  belonging  to  the  United  States ; 1  thirdly, 
the  Board  notified  the  Royal  Commission  that  it  would 
be  necessary  for  them  to  take  most  of  their  sugar,  which 
they  were  refining  on  toll  in  the  United  States,  as  quickly 
as  possible,  in  order  to  allow  an  unrestricted  use  of  the 
refiners'  capacity  for  the  large  domestic  trade  which 
was  bound  to  come  later  in  the  year,  when  no  beet  and 
Louisiana  sugars  would  be  available  to  help  meet  the 
demand ;  finally,  the  Board  issued  public  notice  through 
a  general  news  release  stating  the  situation  plainly, 
urging  the  consumers  to  anticipate  their  summer  wants 
lest  a  shortage  be  brought  about  the  latter  half  of  the 
year  when  a  demand  developed  everywhere  simul- 
taneously. The  text  of  this  notice  is  here  given  because 
of  the  fact  that  it  was  prophetic  in  many  ways.  This 
notice  was  released  through  the  office  of  the  Food  Ad- 
ministration : 

1  These  sales  amounted  to  133,603  tons.  See  page  80  above  for  details  as 
to  destinations  of  the  sugar  shipped. 


TEMPORARY  ARREST  OF  DEMOBILIZATION          97 

ANNOUNCEMENT  OP  THE  UNITED  STATES  FOOD  ADMINISTRATION 

115  Broadway,  New  York, 
April  14,  1919. 

The  Food  Administration  urges  upon  dealers  in  refined  sugar 
the  desirability  of  their  replenishing  their  stocks  now,  to  insure 
against  the  possibility  of  local  shortages,  particularly  in  the 
Eastern  part  of  the  country  later  on,  when  the  demand  comes 
for  canning.  This  demand  may  be  further  accentuated  by  the 
expected  increase  in  consumption  of  sugar  and  its  products  in 
candy  and  sweet  drinks  as  a  result  of  prohibition. 

The  Food  Administration  is  particularly  eager  that  a  full  supply 
of  sugar  should  become  available  to  home  canners  for  preserving 
this  summer's  fruits.  Last  season,  on  account  of  restrictions 
and  difficulties  in  transportation,  there  was  an  unequal  distri- 
bution of  sugar  which  led  to  local  shortages.  This  season  the 
Food  Administration  fears  that  dealers  may  bring  about  the 
same  undesirable  situation  unless  they  replenish  their  stocks  now. 

The  foreign  demand  for  sugar  this  year  is  estimated  at  650,000 
tons,  as  compared  with  150,000  last  year  and  a  normal  of  50,000 
tons.  Of  this  year's  European  requirements,  550,000  tons  have 
already  been  contracted  for.  This  sugar  will  go  forward  in  the 
first  nine  or  ten  months  of  the  year  instead  of  being  spread  over 
twelve.  Ships  have  already  been  allocated  for  60  per  cent  of 
the  amount.  The  foreign  buyers  are  already  taking  steps  to 
insure  their  getting  their  sugar,  and  if  the  American  local  buyers 
do  not  exercise  similar  precautions  and  continue  to  refrain  from 
buying,  they  will  find  themselves  unable  to  secure  the  sugar  they 
will  require  later  on,  during  the  large  consuming  months  from 
June  i  to  October  i,  since  the  refiners'  ability  to  deliver  is  limited 
(  by  their  daily  refining  capacity,  which  will  be  taken  to  meet  their 
foreign  contracts. 

There  is  not,  in  the  opinion  of  the  Sugar  Equalization  Board 
officials,  any  actual  shortage  of  sugar  now  and  no  prospect  of  one, 
at  least  before  next  fall,  but,  on  the  other  hand,  there  is  no  pros- 
pect of  any  material  change  in  price  that  would  justify  merchants 
in  delaying  their  buying  orders.  The  price  of  sugar  to-day  in 
the  United  States  is  lower  than  that  in  any  European  country 
(except  Denmark,  where  there  is  a  special  situation).  Against 
our  10  cents  per  pound,  prices  hi  Europe  vary  from  12  cents  to  45 
cents. 

Such  were  the  efforts  of  the  Sugar  Equalization  Board 
to  cope  with  the  situation  as  it  developed  at  this  point. 
Suddenly  there  developed  the  change  in  the  entire  world 


98       GOVERNMENT  CONTROL  OF  SUGAR 

situation  noted  above :  first  of  all,  reports  came  from 
Java,  Japan,  Formosa,  and  India,  indicating  that  sugar 
crops  there  had  declined  seriously  as  compared  with 
the  expectations  at  the  beginning  of  the  year ;  secondly, 
the  beet  supplies  were  reported  as  having  been  completely 
used  up  in  Europe  and  the  1920  crop  was  not  to  be 
available  until  September ;  thirdly,  the  summer  demand 
developed  all  over  the  world,  simultaneously  due  to  the 
usual  needs  for  preserving  fruits,  canning,  soft  drinks, 
ice  creams,  etc.  In  the  United  States  the  demand  was 
increased  by  the  intensified  activity  in  canning  of 
vegetables  and  fruits,  resultant  from  the  special  training 
in  these  directions  during  the  war ;  by  the  restoration  of 
the  so-called  " non-essential"  sugar-using  industries; 
by  the  extension  of  prohibition  throughout  the  United 
States,  and  other  causes. 

It  must  not  be  forgotten  that  all  these  factors  operated 
at  a  time  when  the  dealers  in  the  United  States  were 
operating  on  the  barest  margin  of  stocks.  Moreover, 
no  Louisiana  sugar  was  available  in  the  South,  since  the 
entire  crop  had  been  disposed  of  and  no  new  crop  was 
to  be  available  until  November;  also  the  old  crop  beet 
sugar  was  practically  exhausted  and  no  new  crop  in  any 
consequential  amount  could  be  expected  until  August. 
Thus  the  heavy  demand  from  Europe,  particularly  from 
the  United  Kingdom,  France,  and  Italy,  and  the  heavy 
demand  in  the  United  States  came  at  the  worst  period 
of  the  year,  when  the  entire  supply  had  to  be  produced 
through  the  refineries,  and  the  capacity  of  the  re- 
fineries was  strained  to  the  utmost.  Shipments  were 
thus  delayed  owing  to  this  "peak  load  "  congestion,  with 
further  complications  due  to  railroad  delays.  Abruptly 
and  simultaneously  sugar  buyers  realized  that  the  price  of 
sugar  would  certainly  not  drop,  but  on  the  contrary, 
were  it  not  for  the  restraining  hand  of  the  Government, 
prices  would  certainly  soar.  Since  no  one  knew  how 
long  the  Government  intended  to  control  the  sugar 


TEMPORARY  ARREST  OF  DEMOBILIZATION          99 

industry,  it  was  clear  that  if  supplies  of  sugar  were  to 
be  obtained  with  reasonable  promptness  and  at  fair 
prices,  it  was  important  to  place  orders  for  as  much 
sugar  as  possible  immediately.  Orders  then  poured 
in  at  the  various  refineries  until  they  were  completely 
deluged.  The  situation,  bad  as  it  was,  was  made  worse 
by  the  psychologic  effect  of  the  rumors  of  an  impending 
longshoremen's  strike  at  the  port  of  New  York,  which 
became  an  actuality  in  July.  Buyers  became  very 
anxious  about  their  future  supplies  when  confronted 
with  the  stoppage  of  marine  traffic  between  Porto  Rico 
and  Cuba  and  New  York.  A  panic-stricken  market 
was  then  the  result  and  no  control  of  demand  was 
possible.  In  short  there  resulted  a  "run"  on  the  nation's 
sugar  bank. 


CHAPTER  VII 
REIMPOSITION  OF  WAR-TIME  RESTRICTIONS 

Restrictions  on  Export  and  Distribution 

CONFRONTED  with  the  above  perplexing  situation 
in  the  sugar  market,  the  Board  directed  its  efforts  to 
ameliorate  conditions.1  The  obvious  thing  was  to  in- 
crease the  domestic  supply  at  once,  and  since  there  was 
no  machinery  in  existence  to  restrict  consumption  this 
could  be  done  only  by  eliminating  exports.  For  there 
were  no  supplies  available  except  such  sugars  as  were 
coming  from  day  to  day  from  sources  outside  the  United 
States.  The  simplest  thing  would  have  been  the  re- 
imposition  of  an  embargo  on  all  exports  of  sugar  from 
the  United  States,  such  as  was  in  effect  during  the  war. 
The  Board  found  upon  investigation  that  legal  authority 
for  such  action  was  doubtful ;  moreover  the  War  Trade 
Board  was  practically  out  of  existence  and  the  Food 
Administration  organization  was  about  dissolved.1  In- 
stead of  an  embargo,  the  President  of  the  Board  re- 
quested refiners,  as  a  patriotic  act,  to  cease  selling  or 
shipping  any  sugar  abroad  for  the  time  being,  including 
the  sugar  refined  on  toll  for  the  Royal  Commission,  with 
the  exception  of  such  contracts  as  were  outstanding 
and  which  had  to  be  liquidated.  The  effect  of  this 
voluntary  agreement  by  refiners  is  to  be  noted  in  the 
following  figures : 

1  See  Appendix,  Exhibit  17,  for  letter  from  the  President  of  the  Board  to  the 
War  Trade  Board  urging  imposition  of  embargo  on  export  of  sugar,  page  229. 


REIMPOSITION  OF  WAR-TIME   RESTRICTIONS        IOI 

TABLE    SHOWING    EXPORTS    (EXCLUSIVE    ROYAL    COMMISSION) 

CONTRACTED  FOR  BY  REFINERS  PRIOR  TO  JULY  15,  AND 

AMOUNTS  ACTUALLY  SHIPPED  THEREAFTER 


CONTRACTED  FOR  SHIPMENT  IN 
MONTH  OF 

AMOUNT  CONTRACTED  YOR 
(LONG  TONS) 

ACTUAL  SHIPMENT 
(LONG  TONS) 

July  . 

20,262 

24,203 

August  

26,200 

20,755 

September  

10,^8 

20,622 

October      

I3,34< 

0,2s7 

November  

3,SOO 

20,104- 

December  . 

'I  OOO 

I.  TOO 

Total  ..... 

02.  OCX 

06,230 

The  above  table  shows  that  the  amount  shipped  was 
practically  equal  to  the  amount  contracted  for,  thus 
demonstrating  that  practically  no  sales  were  made  after 

July  15- 

The  exhibit  in  relation  to  the  Royal  Commission  ex- 
ports is  even  more  significant : 

TABLE  COMPARING  SCHEDULE  OF  SHIPMENTS  FOR  ROYAL 
COMMISSION  SUGARS  WITH  ACTUAL  SHIPMENTS 


MONTH 

SCHEDULE 

SHIPMENTS 

January      

22,OOO 



February    

36,000 

0,141 

March    

S3,  OOO 

2I,O26 

April      

03,  OOO 

64.3O3 

May       

55,000 

73,  SOI 

June  

SS.OOO 

74,0  TO 

July  . 

4.=;,  ooo 

40,810 

August  

3*7  ,OOO 

T.4.0O 

September  

3";,ooo 

I2,8oO 

October  

3s,  OOO 

"CO.7IO 

November                      '. 

34,000 

3Q,O7<; 

December  

59,764 

Total  

500,000     , 

447.71:0 

102       GOVERNMENT  CONTROL  OF  SUGAR 

It  will  be  noted  that  July  exports  of  Royal  Com- 
mission sugars  dropped  to  almost  half  of  the  June  ex- 
ports, while  for  August  and  September  the  amounts 
were  practically  negligible.  It  must  be  remembered 
that  the  raw  sugar  from  which  the  above  refined  sugar 
was  made,  belonged  to  the  Royal  Commission,  and  the 
effect  of  stopping  these  exports  was  to  release  an  equiva- 
lent amount  for  United  States  consumption.  The 
amount  so  borrowed  from  the  Royal  Commission  had 
to  be  returned  ultimately,  either  from  Cuba  in  raws 
or  from  the  United  States  in  refined.  Accordingly, 
unlike  the  stoppage  of  the  exports  to  the  other  countries 
as  in  the  preceding  table,  the  effect  of  which  was  to  add 
to  the  domestic  supplies,  the  effect  of  this  embargo  on 
Royal  Commission  exports  was  of  temporary  advantage 
only.  It  can  hardly  be  stated,  however,  in  view  of  the 
above  figures,  that  refiners  did  not  do  their  part  in  meet- 
ing the  troubled  conditions  which  developed  at  this  time, 
or  that  they  persisted  in  exporting  sugar  when  the 
domestic  trade  was  in  dire  want. 

A  second  measure  aiming  towards  increasing  the 
domestic  supply  was  the  arrangement  made  by  the 
Board  with  the  War  Department  for  the  purchase  and 
distribution  of  about  46,234,000  pounds  of  so-called 
surplus  army  sugars.  In  the  distribution  of  these  sugars, 
the  Board  availed  itself  of  the  services  of  its  Louisiana 
Sugar  Committee  at  New  Orleans,  headed  by  R.  E. 
Milling,  to  take  care  of  the  needs  of  the  Southern  dis- 
trict of  the  country.  For  the  Eastern  part  of  the  coun- 
try, the  American  Refiners'  Committee  at  New  York 
was  utilized,  while  the  Food  Administration  Sugar 
Distributing  Committee  at  Chicago,  the  California  and 
Hawaiian  Sugar  Refining  Company  at  San  Francisco, 
and  the  Chamber  of  Commerce  of  San  Antonio  all 
functioned  within  their  respective  localities.  The  total 
quantity  of  sugar  received  and  distributed  by  each  of 
these  bodies  was  as  follows : 


REIMPOSITION   OF  WAR-TIME   RESTRICTIONS        103 

Louisiana  Sugar  Committee,  New  Orleans  (Sugar 

in  New  Orleans) 17,325,000  Ibs. 

American  Refiners'  Committee,  New  York  (Sugar 

in  New  York,  Baltimore,  and  Atlanta)  .  .  .  10,105,000  Ibs. 

Food  Administration  Sugar  Dis.  Com.,  Chicago 
(Sugar  in  Chicago,  St.  Louis,  Omaha,  and  San 
Francisco) 10,104,000  Ibs. 

California  &  Hawaiian  Sugar  Ref.  Co.,  San  Fran- 
cisco (Sugar  in  San  Francisco) 7,700,000  Ibs. 

Chamber  of  Commerce,  San  Antonio  (Sugar  in 

San  Antonio) 1,000,000  Ibs. 

Total  amount  of  sugar  received  from  the  War 

Department 46,234,000  Ibs. 

The  third  measure  to  relieve  the  situation  was  the 
purchase  by  the  Board  of  320,0x30  bags  (32,000,000  Ibs.) 
of  surplus  beet  sugar  of  the  new  crop  in  California  for 
distribution  in  the  territory  east  of  the  Rocky  Moun- 
tains to  the  Illinois-Indiana  State  Line  and  east  of  Lake 
Michigan.  This  distribution  was  also  handled  by  the 
Food  Administration  Beet  Sugar  Distributing  Com- 
mittee at  Chicago.  In  the  purchase  of  most  of  the  above 
army  and  beet  sugars,  the  Board  adopted  the  policy 
of  absorbing  freight  differentials,  so  that  the  sugar 
might  reach  the  consumer  on  the  basis  of  nine  cents, 
seaboard  basis,  wholesale,  for  granulated. 

To  avoid  the  evil  consequence  of  the  marine  strike, 
the  Sugar  Equalization  Board  cooperated  with  the 
Shipping  Board  and  by  means  of  the  radio  diverted  to 
Cuba  ships  originally  bound  elsewhere,  to  obtain  cargoes 
of  raw  sugar.  However,  the  strike  continued  for  so 
long  a  period  that  the  evil  results  could  be  neutralized 
only  in  small  measure.  It  was  natural  that  the  shortage 
should  be  first  felt  in  the  West  and  Middle  West,  since 
all  old  crop  beet  sugar  had  been  consumed  and  the  new 
crop  was  not  forthcoming  in  large  enough  quantities 
for  several  months.  Although  complaints  of  acute 
conditions  were  not  confined  to  this  part  of  the  country, 
but  were  quite  universal,  it  is  questionable  whether  the 


104       GOVERNMENT  CONTROL  OF  SUGAR 

situation  could  have  been  called  a  shortage,  in  the  ordi- 
nary sense  of  the  word,  since  there  were  sufficient  sugars 
in  sight  to  meet  more  than  the  normal  requirements 
of  the  country,  and  refiners  delivered  larger  quantities 
into  domestic  consumption  each  week  than  ever  before 
in  the  history  of  the  trade.  It  was  simply  that  the  de- 
mand situation  was  entirely  out  of  hand  at  this  time. 

There  was  hope,  however,  that  by  the  middle  of 
September,  in  view  of  the  constant  infiltration  of  new 
supplies  following  the  settlement  of  the  marine  strike, 
the  situation  would  improve  considerably,  particularly 
since  new  crop  beet  sugars  would  then  be  produced  in 
large  quantities,  followed  by  the  Louisiana  production 
in  November.  Just  about  this  time,  however,  a  new 
factor  which  tended  to  make  matters  worse  began  to 
color  the  entire  situation.  Buyers  were  beginning  to 
turn  their  thoughts  to  the  1920  prospects  for  supplies 
and  prices.  The  effect  of  this  factor  in  the  further  in- 
flation of  demand,  at  a  time  of  the  year  when  the 
market  would  have  normally  been  quite  inactive,  has 
already  been  explained  above. 

The  resulting  incessant  demand  upon  the  refineries 
began  to  threaten  a  complete  depletion  of  the  year's 
supplies  by  the  middle  of  October,  if  the  rapid  rate  of 
movement  of  the  refined  sugar  from  the  refineries  were 
not  checked  somehow.  Until  September  i,  1919,  al- 
though the  supplies  were  never  equal  to  the  record  break- 
ing demand,  there  was  always  sufficient  raw  sugar  yet 
to  come  from  the  sources  of  supply  to  provide  for  a 
consumption  far  above  normal.  But  so  heavy  was  the 
movement  of  raw  sugar  in  the  three  weeks  September  i- 
September  20,  that  by  September  20  the  amount  in 
sight  was  less  than  was  actually  received  the  preceding 
year,  as  the  table  on  the  following  page  shows. 

In  view  of  the  above  situation,  action  to  restrict  con- 
sumption was  imperative  along  the  lines  practiced  dur- 
ing the  war.  On  September  25,  Mr.  Zabriskie  addressed 


REIMPOSITION  OF  WAR-TIME   RESTRICTIONS        105 


RAW  SUGAR  AVAILABLE  FOR  PERIOD  SEPTEMBER  20- 
DECEMBER  31,  1919  AND  1918 

Unit :  Long  Tons 


SOURCE 

ESTIMATED  TO  ARRIVE 
SEPT.  ZO-DEC.  31,  1919 

ACTUAL  ARRIVALS  SEPT. 
2&-DEC.  31,  1918 

Cuba      

383,000 

322,703 

Hawaii  

^7,OOO 

II7,86o 

Porto  Rico      .... 
Philippines  and  foreign 
Louisiana   

37,000 

5,000 

15,000 

44,301 
2S,6l2 
18,801 

Total  

4.07,000 

<20,277 

the  following  letter  to  the  Chairman  of  the  American 
Refiners'  Committee,  Mr.  James  H.  Post. 

In  view  of  the  present  abnormal  demand  for  sugar  and  the 
inability  to  keep  pace  with  it,  also  considering  the  limited  supply, 
it  is  the  opinion  of  the  Board  that  a  committee  on  distribution 
should  be  organized  by  you,  not  only  to  stop  duplication  of  orders, 
but  to  give  such  preferences  as  were  suggested  by  the  Food  Ad- 
ministration somewhat  on  the  order  of  the  A-B-C-D-E  class 
arrangement. 

Confectioners  and  candy  manufacturers,  for  instance,  ought 
to  be  cut  down  to  50  per  cent  of  their  last  year's  requirements, 
bakers  to  70  per  cent  and  other  less  essentials  regulated  accord- 
ingly, while  preference  should  be  given  to  manufacturers  of 
medicines,  fruit  preservers,  condensed  milk  companies,  etc.  Our 
observation  has  been  that  candy  manufacturers  have  not  only 
had  their  supply  of  sugar  but  in  many  cases  have  anticipated 
their  wants  and  been  able  to  acquire  sugar  ahead  at  the  expense 
of  more  essential  industries. 

On  September  30,  Mr.  Zabriskie  appeared  before  the 
American  Refiners'  Committee  and  requested  that  a 
sub-committee  be  appointed  to  supervise  the  distribu- 
tion of  cane  sugar  by  the  Atlantic  Coast  and  Gulf 
refiners,  for  the  balance  of  the  year,  in  accordance  with 
the  desire  of  the  Board  for  an  equitable  distribution. 
Mr.  Post  appointed  the  following  Committee : 


106  GOVERNMENT  CONTROL  OF  SUGAR 

Mr.  J.  A.  McCarthy         Mr.  Charles  Bruyn 
Mr.  Edward  Wemple       Mr.  Edward  Y.  Crossmore 
Mr.  Frank  C.  Lowry,  Chairman. 

This  committee  functioned  continuously  for  the 
balance  of  the  year,  allotting  sugars  to  the  trade  in  the 
Eastern  part  of  the  country,  with  proper  relation  to  the 
available  supplies  and  the  normal  requirements  of  each 
purchaser.  In  order  to  add  to  the  supplies  available  for 
the  Eastern  part  of  the  country  at  this  time,  the  Board 
purchased  615,000  bags  of  beet  sugar  (6 1,500,000  pounds) 
which  were  also  distributed  by  the  above  committee. 

Similar  action  was  taken  on  the  Pacific  coast,  where, 
in  spite  of  the  new  beet-sugar  crop,  a  serious  sugar 
famine  was  threatened.  A  "Pacific  Coast  Sugar  Equali- 
zation Committee"  was  appointed,  composed  of  the 
following  members : 

Ralph  P.  Merritt,  Chairman 
P.  C.  Drescher 
George  M.  Rolph 
W.  H.  Hannam 

The  Western  and  the  California  and  Hawaiian  Sugar 
refineries;  the  Spreckels,  the  Union,  and  the  Alameda 
beet  companies  all  agreed  to  have  their  output  distributed 
under  the  supervision  of  the  above  committee.  A  total 
of  738,936  bags  (73,893,600  pounds)  was  distributed,  of 
which  107,834  bags  went  to  manufacturers  and  631,102 
bags  to  the  housewives.  The  cane  sugar  was  sold  at 
the  price  of  nine  cents  (less  2  per  cent  for  cash)  while 
the  beet  sugar  of  the  new  crop  not  covered  by  con- 
tract was  sold  on  a  basis  determined  by  the  Department 
of  Justice,  in  no  case  exceeding  12-3-  cents  plus  freight 
charges  to  any  interior  points  to  the  consumer. 

Another  step  in  the  direction  of  reestablishment  of 
wartime  control  was  recourse  to  the  zone  system.  In 
order  to  prevent  the  draining  away  of  the  cane  sugar 


REIMPOSITION  OF  WAR-TIME   RESTRICTIONS        107 

supplies  of  the  East,  which  were  still  on  the  old  price 
basis  of  nine  cents,  while  new  crop  sugars  were  on  a  higher 
level,  the  Board  announced  on  October  10,  that  after 
October  15,  Atlantic  and  Gulf  refiners  would  not  be 
permitted  to  ship  or  deliver  to  any  point  west  of  Pitts- 
burgh and  Buffalo  and  north  and  west  of  the  Ohio  River. 
The  beet-sugar  producers  and  the  Louisiana  producers 
were  not  restricted  to  any  particular  zone,  since  the 
Board  had  no  control  over  the  new  crops  in  these  regions 
of  the  country.  Such  action  was  not  essential,  anyway, 
since  unlike  the  Eastern  parts  of  the  country,  there  was 
a  surplus  in  these  producing  regions  owing  to  new  crop 
production. 

Restriction  on  Prices 

It  will  be  noted  that  in  the  matter  of  price  there  had 
been  practically  no  change  since  the  stabilization  on 
September  9,  1918,  at  nine  cents  per  pound  for  granu- 
lated. It  may  have  been  a  puzzle  to  many,  why,  when 
faced  with  this  abnormal  demand  of  the  last  half  of 
the  year,  the  Board  did  not  attempt  to  check  it  to  some 
degree  by  increasing  the  price  of  sugar  to  the  trade. 
Such  action  would  have  been  inadvisable  from  several 
points  of  view.  First  of  all,  in  view  of  the  unusual 
economic  conditions  existing  in  the  country  at  this  time, 
particularly  as  manifested  by  the  general  extravagance 
prevalent,  it  was  indeed  seriously  questionable  whether 
any  reasonable  increase  in  price  would  curtail  demand.1 
Secondly,  inasmuch  as  the  basic  price  of  nine  cents  had 
been  determined  upon  in  September,  1918,  as  shown  in 
the  preceding  pages,  only  after  careful  scrutiny  of  costs 
of  production  and  was  found  to  be  sufficient  to  main- 
tain and  even  encourage  production,  a  higher  price 
would  have  yielded  extortionate  profits  to  many  pro- 

1  In  this  connection,  it  is  pertinent  to  note  that  the  great  increase  in  the 
price  of  sugar  following  the  release  of  Government  control  was  not  followed 
by  any  reduction  in  consumption  directly. 


108      GOVERNMENT  CONTROL  OF  SUGAR 

ducers.  Moreover,  the  domestic  price  was  really  de- 
termined by  the  price  for  Cuban  raw  sugar,  which  had 
been  fixed  by  the  contract  made  in  1918,  and  it  was  equal 
to  the  domestic  price  of  nine  cents  for  refined,  with  the 
Board  absorbing  a  differential  of  38  cents  per  100  pounds. 
Unless  the  Cubans  were  to  be  given  more  for  their  sugar 
than  was  stipulated  in  the  contract,  there  could  be  no 
increase  in  price,  else  the  Board  would  be  obliged  to  absorb 
a  greater  differential  than  the  38  cents  per  100  pounds. 
The  Board  could  hardly  have  found  justification  for 
such  action,  in  view  of  the  determination  of  the  Govern- 
ment to  force  a  lower  price  level  for  all  commodities. 

While  the  Board  thus  continued  its  policy  of  main- 
taining the  nine-cent  level,  many  wholesalers  and  re- 
tailers, no  longer  having  occasion  to  fear  the  practically 
defunct  Food  Administration,  utilized  the  shortage 
conditions  to  charge  abnormal  prices  for  sugar.  As 
soon  as  the  Board  became  cognizant  of  these  conditions, 
it  took  preventive  action.  At  a  meeting  of  Directors  on 
July  30,  it  was  decided  "that  the  officers  of  the  corpora- 
tion be  authorized  to  report  cases  of  profiteering  by 
dealers  in  sugar  to  the  Enforcement  Division  of  the 
United  States  Food  Administration,  with  a  recom- 
mendation that  action  be  taken  against  such  dealers 
in  flagrant  cases  and  that  upon  the  request  of  the  Food 
Administration  any  expenses  connected  with  proceed- 
ings against  such  dealers  should  be  paid  by  the  United 
States  Sugar  Equalization  Board,  Inc." 

Shortly  after  this,  the  whole  problem  of  the  rapidly 
increasing  price  level  became  a  subject  for  governmental 
action  and  the  President  of  the  United  States  directed 
the  Attorney  General  to  attack  the  whole  problem. 
The  activities  of  the  Attorney  General  in  this  matter 
are  too  well  known  to  require  exposition  here.  It  will 
suffice  to  say  that  the  Sugar  Equalization  Board  co- 
operated actively  with  the  Attorney  General  in  de- 
ciding fair  wholesalers'  and  retailers'  margins  on  sugar. 


CHAPTER  VIII 

END   OF  GOVERNMENT   CONTROL 

IN  the  preceding  chapter,  the  author  endeavored  to 
demonstrate  how  the  Board  reluctantly  reimposed 
governmental  wartime  restrictions  on  the  sugar  in- 
dustry, because  there  was  no  alternative.  Just  as  re- 
luctantly, the  Directors,  as  early  as  July,  turned  to  a 
consideration  of  plans  for  the  following  year.  Un- 
doubtedly, the  best  procedure  and  the  natural  desire 
of  the  Directors  was  to  wind  up  the  affairs  of  the  Board 
on  December  31,  1919,  and  let  the  trade  return  to  free 
market  conditions,  —  if  there  were  any  probability  that 
the  trade,  under  the  existing  abnormal  conditions  in 
the  sugar  world,  could  assume  the  responsibility  of  pro- 
viding the  American  people  with  their  large  require- 
ments at  a  reasonable  price.  But  the  Board,  in  spite  of 
its  own  desires,  felt  that  it  would  be  committing  a  serious 
error  if  it  did  not  consider  the  whole  problem  carefully. 

On  July  18,  1919,  a  cable  was  sent  by  Mr.  Zabriskie 
and  Mr.  Whitmarsh  to  Mr.  Hoover  calling  his  attention 
to  the  necessity  for  deciding  on  a  policy  for  the  coming 
year.  Mr.  Hoover  cabled  the  following  reply  on  July  23, 
1919: 

R  For  your  own  advice  and  transmission  to  the  President.  It 
is  necessary  to  take  important  decisions  as  to  the  sugar  control 
in  the  United  States  in  order  to  anticipate  the  marketing  of  the 
new  beet  harvest  and  to  settle  policy  with  Cuba  for  the  next 
year.  You  will  recollect  that  last  July  I  presented  to  you  the 
view  that  either  in  event  of  continued  war  and  the  consequent 
shipping  isolation  of  the  East  Indies  sugar,  or  in  the  event  of 

109 


110      GOVERNMENT  CONTROL  OF  SUGAR 

peace  and  the  opening  of  new  demands,  there  would  be  a  world 
sugar  shortage  in  the  year  1919.  I  recommended  that  we  form 
the  Sugar  Equalization  Board  to  purchase  the  Cuban  sugar  crop 
jointly  with  the  Allies  and  to  arrange  for  equalization  in  marketing 
with  the  domestic  sugar,  in  order  to  assure  American  supplies  at 
reasonable  prices  and  to  eliminate  speculation  and  profiteering 
and  that  the  Board  should  secure  a  small  margin  in  handling 
Cuban  sugar  to  cover  losses  in  the  event  of  reverse  on  Atlantic 
shipping  and  to  equalize  freight  and  distribution  costs.  These 
things  were  done  and  to-day  the  United  States  is  the  only  large 
nation  possessing  liberal  supplies  for  the  entire  year  and  at  a 
saving  of  four  cents  per  pound  under  the  world  price  or  equal  to 
abput  $25,000,000  per  month  saving  to  the  consumer.  These 
courses  of  action  grew  out  of  war  disruption  of  supply  and  dis- 
tribution. Decision  must  now  be  made  as  to  whether  Congress 
should  be  recommended  to  legislate  authority  for  the  continua- 
tion of  these  measures  over  the  year  1920,  providing  again  for  the 
purchase  of  the  Cuban  crop  and  the  control  of  domestic  production, 
stabilization  of  price,  and  distribution.  The  intrinsic  situation  is 
by  no  means  clear  as  to  the  prospect  of  supplies  and  it  is  argued 
by  many  that  there  will  be  a  continued  shortage  over  the  year 
1920,  with  attendant  speculation  and  profiteering,  unless  action 
is  taken. 

The  matters  to  be  considered  are:  (a)  the  crop  prospects 
of  the  world,  in  which  there  is  undoubtedly  an  increase  over 
prewar  in  the  Western  Hemisphere  and  East  Indies,  but  the 
European  beet  production  (outside  Russia)  will  be  apparently 
twenty-five  per  cent  short  of  prewar  average,  and  although  the 
Russian  situation  is  unknown  there  are  no  exports  likely ;  (&)  the 
probable  consumption  of  the  world,  as  to  which  there  is  an  un- 
doubted increase  outside  of  Europe,  especially  in  the  United 
States,  but  with  regard  to  Europe  the  limited  buying  power 
during  the  next  year  (unless  there  is  very  rapid  economic  recovery) 
will  tend  to  restrain  the  non-essential  use  of  sugar. 

The  problem  is  also  affected  by  (a)  whether  European  Gov- 
ernments will  continue  their  national  buying  and  with  national 
finance  be  in  position  to  contract  for  national  supplies  for  long 
periods  in  advance,  to  the  prejudice  of  a  free  market  and  the 
ability  of  normal  commerce  to  purchase  on  the  same  terms ;  this 
will  probably  depend  upon  whether  the  United  States  will  allow 
credits  to  foreign  countries  to  be  used  for  such  form  of  purchase ; 
(6)  whether  in  the  long  view  the  adjustment  of  production  to  world 
necessity  will  not  be  more  rapid  under  free  operation  of  supply 
and  demand,  although  there  may  be  great  fluctuations  in  the 
process  of  readjustment ;  (c)  whether,  from  a  social  point  of  view 


END  OF  GOVERNMENT  CONTROL  ill 

it  is  desirable  to  perpetuate  great  governmental  control  in  com- 
merce now  that  the  war  interference  of  supply  through  short 
shipping,  the  necessity  of  control  of  cargoes,  etc.,  has  largely 
disappeared,  even  though  speculation  and  profiteering  may  result. 
Any  continuation  of  control  will  require  action  by  Congress  and 
it  must  embrace  appropriations,  the  continuation  of  power  to 
embargo,  control  of  speculation,  profiteering,  and  distribution. 
The  alternative  course  to  any  action  of  the  above  character  is 
for  the  Sugar  Equalization  Board  to  announce  its  cessation  of 
control  at  an  early  date  prior  to  the  marketing  season  of  domestic 
beet  and  cane  sugars  and  to  dispose  of  the  remaining  stocks  from 
the  old  crop  purchased  by  them  at  the  market  pric"es  from  day  to 
day  until  they  are  exhausted.  Owing  to  the  delays  hi  the  Austrian 
Treaty  it  seems  impossible  for  me  to  withdraw  American  control 
of  railways,  coal  mines  and  transport  of  food  in  Central  Europe 
before  the  middle  of  September  without  producing  absolute  chaos 
in  that  area,  and  therefore  I  will  not  be  able  to  arrive  home  before 
that  date.  The  determination  of  the  sugar  policies  requires  im- 
mediate consideration  and  my  lack  of  intimate  knowledge  of 
American  situation  after  eight  months  absence  and  my  inability 
to  leave  here  renders  it  impossible  for  me  to  be  of  useful  service 
in  the  matter.  I  therefore  suggest  you  request  Mr.  Zabriskie 
and  Professor  Taussig  and  the  other  members  of  the  Sugar  Equali- 
zation Board  to  present  you  their  recommendations  in  the  matter 
independent  of  myself.  If  as  a  result  of  your  counsels  you  should 
decide  to  propose  to  Congress  that  the  control  be  continued  it  is 
imperative  that  a  new  Chairman  should  be  chosen  in  my  place 
at  once  in  order  that  he  may  be  of  assistance  to  Congress  in  legis- 
lation and  that  he  should  be  in  charge  from  the  beginning,  as  I 
must  in  any  event  retire  this  autumn.  As  the  new  Chairman 
should  be  familiar  with  the  problems  and  their  past  adminis- 
tration I  would  suggest  he  be  chosen  from  the  present  directorate. 

Following  hard  upon  receipt  of  the  above  cable  from 
Mr.  Hoover,  the  representatives  of  the  Cuban  Govern- 
ment, after  some  informal  discussions,  addressed  a 
letter  to  Mr.  Zabriskie,  suggesting  that  negotiations 
be  entered  into  by  the  Board  for  the  Cuban  crop  of 
I92O.1  The  Directors  gave  .serious  attention  to  this  offer 
and  decided  to  lay  the  matter  before  the  President  of 
the  United  States.  The  text  of  the  letter  to  the  Presi- 

1  See  Appendix,  Exhibit  19,  for  text  of  this  letter,  page  233. 


112      GOVERNMENT  CONTROL  OF  SUGAR 

dent  and  the  memorandum  which  was  inclosed,  is  given 
here  in  full  because  of  its  intrinsic  importance : 

AUGUST  14, 1919. 

Dear  Mr.  President :  The  Sugar  Equalization  Board  is  in 
receipt  of  a  letter  under  date  of  July  29  from  the  Cuban  com- 
missioners, tendering  to  the  American  Government  the  Cuban 
sugar  crop  for  1920. 

We  deem  it  advisable  that  the  Cuban  commission  should  be 
advised  at  an  early  date  as  to  whether  our  Government  proposes 
to  consider  this  tender.  The  authority  of  this  Board  does  not 
extend  beyond  the  purchase  and  distribution  of  this  year's  sugar 
crop,  and  we  venture  to  suggest  the  control  of  sugar  for  the  com- 
ing year  must  now  be  determined. 

I  am  inclosing  herewith  a  memorandum  setting  forth  the  sugar 
situation  as  it  exists  and  such  information  as  we  possess  concern- 
ing the  prospects  for  the  coming  year  and  other  points  for  your 
consideration  in  advising  this  Board  as  to  the  policy  you  desire 
to  be  pursued. 

The  officers  of  the  Board  are  prepared  to  furnish  you  with  any 
further  information  that  you  may  desire. 

MEMORANDUM 

The  United  States  Sugar  Equalization  Board,  Inc.,  was  in- 
corporated on  the  i2th  day  of  July,  1918,  under  the  laws  of  the 
State  of  Delaware.  The  organization  of  the  Equalization  Board 
was  accomplished  under  the  approval  of  the  President  of  the 
United  States,  who  subscribed  for  $5,000,000  of  its  capital  stock 
(being  the  entire  stock  issued),  which  is  now  and  has  at  all  times 
been  held  for  and  on  behalf  of  the  United  States. 

The  plan  of  the  Food  Administration  for  regulation  and  control 
of  the  price  of  sugar  and  the  distribution  thereof  for  the  year 
1917-18  in  the  United  States,  in  view  of  the  necessity  for  stimu- 
lation of  production  of  domestic  sugar,  was  not  considered  entirely 
sufficient  for  the  year  1918-19,  and  thereupon  it  was  concluded 
that  the  Equalization  Board  (under  the  approval  of  the  Presi- 
dent) should  endeavor  to  purchase  the  entire  crop  of  1918-19 
Cuban  sugar,  and  thereby  insure  a  regular  and  sufficient  supply 
of  sugar  to  the  people  of  the  United  States  at  a  reasonable  price 
under  then  existing  conditions. 

It  must  at  all  times  be  borne  in  mind  that  Cuban  sugar  is  the 
main  reliance  of  the  people  of  the  United  States  for  their  annual 
sugar  supply,  and  while  beet  sugar  and  Louisiana  cane  is  produced 


END  OF  GOVERNMENT  CONTROL  113 

in  the  United  States,  and  the  United  States  gets  sugar  from 
Hawaii  and  others  of  its  possessions,  yet  the  sugar  from  all  such 
sources  is  entirely  insufficient  to  meet  the  normal  requirements 
of  the  people  of  the  United  States,  and  Cuban  sugar  has  been  and, 
so  far  as  can  be  seen,  will  remain  the  largest  single  source  of  supply 
for  the  people  of  the  United  States  for  their  annual  requirements. 

On  the  24th  day  of  October,  1918,  the  Equalization  Board 
entered  into  a  contract  with  representatives  of  the  Cuban  Govern- 
ment and  agents  of  various  Cuban  producers  of  sugar  hi  the  island 
of  Cuba,  under  which  the  Equalization  Board  purchased  sub- 
stantially all  the  raw  sugar  produced  in  the  island  of  Cuba  during 
the  crop  season  of  1918-19. 

The  Sugar  Equalization  Board  being  duly  authorized  by  said 
contract,  resold  one  third  of  the  Cuban  raw  sugar  purchased  by 
it  as  aforesaid  to  the  Royal  Commission  of  the  United  Kingdom, 
for  the  use  of  it  and  its  allies  and  at  the  same  price  at  which  the 
raw  sugar  was  purchased  under  the  contract  aforesaid. 

In  furtherance  of  its  plan  of  securing  regular  and  sufficient 
supplies  of  sugar  to  the  American  people  and  the  Army  and  Navy, 
at  a  reasonable  price,  even  during  the  disorganized  period  of  world 
trade,  the  Equalization  Board,  on  October  24,  1918,  entered  into 
a  contract  with  the  refiners  of  sugar  in  the  United  States  and 
Herbert  Hoover,  as  United  States  Food  Administrator,  under 
which  the  refiners  agreed  to  purchase,  and  the  Equalization  Board 
agreed  to  sell  to  the  refiners  their  entire  requirements  of  raw  sugar 
for  the  operation  of  their  refineries  for  the  period  beginning 
October  24,  1918,  and  ending  December  31,  1919,  and  the  re- 
finers agreed  not  to  purchase  any  raw  sugar  from  any  person, 
country,  or  source  of  supply,  during  the  said  period,  other  than 
from  the  Equalization  Board.  The  price  to  be  paid  by  the  re- 
finers for  the  raw  sugar  is  7.28  cents  per  pound,  96°  average 
polarization  (duty,  if  any,  paid)  delivered  at  refinery,  and  the 
refiners  to  sell  all  sugar  refined  by  them  at  a  price  not  more  than 
1.54  cents  per  pound  wholesale  of  refined  sugar,  f.  o.  b.  refinery, 
above  the  price  of  7.28  cents  per'pound  paid  to  the  Equalization 
Board,  the  result  being  a  wholesale  price  of  sugar  throughout  the 
United  States  of  not  exceeding  9  cents  per  pound  at  refining  points. 

It  will  be  observed  that  under  the  terms  of  this  contract  each 
refiner  agrees  to  conduct  his  or  its  export  business  under  the 
direction  of  the  Equalization  Board  and  to  export  or  distribute 
to  the  domestic  trade  such  proportion  of  its  refined  sugars  as  the 
Equalization  Board  may  direct. 

This  contract  was  submitted  to  the  Attorney  General  and  his 
opinion  was  received  to  the  effect  that  the  contract  was  not  in 
violation  of  any  law  of  the  United  States. 


114      GOVERNMENT  CONTROL  OF  SUGAR 

By  their  terms,  the  three  contracts  aforesaid  expire  on  the 
3ist  day  of  December,  1919.  In  view  of  the  fact  that  the  Equali- 
zation Board  was  incorporated  and  entered  into  the  contracts 
aforesaid  with  the  approval  of  the  President  of  the  United  States, 
and  that  the  entire  stock  of  the  Equalization  Board  is  held  by 
him  for  and  in  behalf  of  the  United  States,  the  members  of  the 
board  of  directors  of  the  Equalization  Board  deem  it  proper  to 
submit  to  the  President  this  memorandum. 

1.  By  its  purchase  of  the  Cuban  raw  sugar  the  Equalization 
Board  has  been  able  to  assure,  up  to  this  time,  to  the  American 
people  a  regular  and  sufficient  supply  of  refined  sugar,  and  at  a 
wholesale  price  not  exceeding  9  cents  per  pound  at  refining  points, 
being  the  lowest  price  for  refined  sugar  in  any  country  of  the 
world.     Occasional  and  temporary  local  shortages  have  occurred, 
due  principally  to  the  interruption  of  regular  shipments  of  raw 
sugar  from  Cuba  during  the  present  marine  strike,  which  occurred 
at  the  period  of  highest  consumption. 

2.  Out  of  the  price  at  which  the  raw  sugar  was  sold  to  the 
refiners,  the  Equalization  Board  has,  up  to  this  time,  accumulated 
reserves  of  about  $30,000,000,  which  belong  to  the  United  States, 
and  but  for  the  contracts  aforesaid- the  Equalization  Board  be- 
lieves that  the  price  for  refined  sugar  to  the  American  people 
would  have  been  much  higher  and  much  more  would  have  gone 
to  the  Cuban  producers,  the  refiners,  or  to  speculators,  at  the 
expense  of  the  American  people. 

3.  There  is  to-day  a  world  shortage  of  sugar.    Demands  are 
made  from  Europe  and  even  from  Japan  for  sugar  which  it  is 
impossible  to  fill  without  creating  a  serious  shortage  in  the  United 
States,  and  from  the  information  that  the  Equalization  Board 
has  been  able  to  secure,  it  seems  probable  that  the  world  sugar 
shortage  for  1920  will  be  more  acute  than  for  the  year  1919.  .  .  . 

Conditions  are  so  abnormal  and  the  prospect  of  securing  a 
regular  supply  of  sugar  at  a  reasonable  price  for  the  people  of 
the  United  States  for  the  year  1920  is  so  uncertain  that  the  Equali- 
zation Board  concludes,  from  a  commercial  point  of  view,  that 
its  duty  requires  it  to  suggest  to  the  President  that,  in  reply  to 
the  communication  from  the  representatives  of  Cuban  producers, 
negotiations  be  entered  into  for  the  purpose  of  securing  the  sugar 
required  for  the  necessities  of  the  people  of  the  United  States  for 
the  year  1920  from  Cuba  under  somewhat  the  same  arrangements 
as  the  Equalization  Board  was  able  to  make  with  the  Cuban  com- 
missioners and  producers  and  the  refiners  in  the  United  States  for 
the  year  ending  December  31,  1919.  This  suggestion  is  made 
entirely  from  our  consideration  of  the  sugar  situation  from  its 
standpoint  of  assuring  the  American  people  a  regular  supply  at 


END  OF  GOVERNMENT  CONTROL       115 

a  reasonable  price  and,  of  course,  is  subject  to  the  general  policy 
of  the  Government  as  to  the  advisability  of  continuing  control 
and  regulation  of  food  commodities. 

A  dissenting  view  was  filed  by  one  director,  Dr.  Frank 
W.  Taussig,  which  was  as  follows : 

I  regret  not  to  be  able  to  reach  the  same  conclusion  as  the 
other  members  of  the  Sugar  Equalization  Board.  I  believe  that 
no  negotiation  should  be  entered  with  the  Cuban  producers,  and 
that  the  regulation  and  restriction  of  sugar  prices  should  cease 
with  the  close  of  the  present 'arrangement,  December  31. 

It  is  true  that  the  evidence  now  available  points  to  a  shortage 
of  sugar  in  1920  and  to  a  possibility  of  prices  in  that  year  as  high 
as  those  of  1919,  or  even  higher.  But  no  certain  conclusions  can 
be  reached  about  the  future.  Prices  of  sugar  will  be  affected 
not  only  by  the  incoming  supplies,  but  by  the  general  political 
and  monetary  conditions  of  the  whole  world.  The  general  level 
of  prices  in  the  United  States  and  in  other  countries  may  be  lower 
than  it  is  now.  Consumption  may  be  reduced  by  changes  in 
general  business  conditions  or  by  restrictive  measures  in  import- 
ing countries.  The  present  recommendation  of  the  board  is  that 
the  United  States  (through  the  Board)  should  repeat  a  huge  com- 
mercial venture,  in  the  hope  of  protecting  consumers  and  of  in- 
curring no  loss,  but  with  the  clear  possibility  of  having  to  assume 
a  loss.  The  operation  would  involve  a  guarantee  by  the  Govern- 
ment of  extremely  high  profits  to  the  Cuban  sugar  planters,  and 
also  a  virtual  guarantee  of  similar  profits  to  our  beet-sugar  pro- 
ducers, as  well  as  to  the  planters  of  Louisiana,  Hawaii  and  Porto 
Rico.  It  would  necessarily  lead  to  contracts  with  the  sugar 
refiners  which  would  guarantee  good  profits  to  them  also.  No 
doubt  in  the  absence  of  Government  regulation  all  these  producers 
might  make  profits  higher  still ;  but  prediction  as  to  the  outcome 
one  way,  or  the  other  can  not  be  made  with  any  confidence. 
Business  of  this  kind  may  be  undertaken  by  the  Government  under 
stress  of  war,  but  should  cease  now  that  we  are  at  peace. 

Moreover,  the  regulation  of  the  price  of  sugar  cannot  in  my 
judgment  stand  alone.  The  whole  relation  of  government  to 
industry  in  time  of  peace  is  involved.  If  the  price  of  sugar  is  to 
be  specifically  controlled,  so  should  that  of  bread,  of  meat,  of 
clothing.  In  the  main  we  must  look  for  a  remedy  to  the  natural 
development  of  production  and  to  the  return  of  the  entire  world 
to  normal  financial  and  economical  conditions. 


Il6      GOVERNMENT  CONTROL  OF  SUGAR 

The  Board  received  an  acknowledgment  of  the  above 
communication  from  the  White  House,  but  no  reply 
from  President  Wilson.  After  a  month  had  elapsed,  the 
Board  became  anxious  over  the  situation  and  under 
heavy  pressure  from  the  trade  for  a  statement  of  a 
definite  policy  addressed  another  letter  to  the  Presi- 
dent asking  a  reply  to  its  former  letter.  Only  an 
acknowledgment  was  received.  On  September  22,  the 
Cuban  representatives,  in  a  letter  to  the  Board,1  with- 
drew their  offer  previously  made  to  negotiate  for  the 
1920  crop.  On  the  following  day,  September  23,  1919, 
Mr.  Zabriskie  addressed  this  communication  to  the 
President : 

My  dear  Mr.  President :  The  inclosed  copy  of  a  letter 2  from 
Messrs.  Hawley  and  Rionda,  representing  the  sugar  producers  of 
Cuba,  is  self-explanatory,  and  in  view  of  the  fact  that  about 
one  third  of  the  Cuban  crop  of  next  year  has  since  been  disposed 
of  for  export  to  countries  other  than  the  United  States,  we  believe 
that  the  situation  is  out  of  hand. 

Therefore  in  order  to  protect  the  interests  of  the  American 
consumer  we  have  advised  American  refiners  as  to  conditions, 
so  that  they  may  purchase  raw  sugar  as  per  prewar  times. 

Here  then  was  a  most  important  step  towards  de- 
control :  refiners  had  been  notified  to  purchase  their  raw 
supplies  as  in  prewar  times. 

The  whole  sugar  situation  then  became  subject  to 
Congressional  inquiry  and  action.  On  September  27, 
1919,  Senator  New  submitted  a  resolution  (66th  Congress, 
ist  Session,  S.  Res.  197)  "directing  the  Senate  Com- 
mittee on  Agriculture  and  Forestry  to  investigate  the 
shortage  and  price  of  sugar  in  the  United  States  and  so 
forth."  It  is  unnecessary  here  to  go  into  the  details 
of  this  investigation,  the  conflict  between  the  opposing 
groups  in  the  Senate  and  the  recommendations  of  the 
Committee  to  Congress,  which  are  all  in  the  records  of 
the  Senate.  It  is  only  necessary  to  note  that  the  net 

See  Appendix,  Exhibit  20,  for  text  of  this  letter,  page  234.  2  Ibid. 


END  OF  GOVERNMENT  CONTROL  117 

result  of  this  committee's  work  was  the  final  enactment 
of  the  McNary  Bill  on  December  20,  which  was  as 
follows : 

An  Act 

To  provide  for  the  national  welfare  by  continuing  the  United 
States  Sugar  Equalization  Board  until  December  31,  1920,  and 
for  other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  hi  Congress  assembled,  that  the 
President  is  authorized  to  continue  during  the  year  ending  De- 
cember 31,  1920,  the  United  States  Sugar  Equalization  Board 
(Incorporated),  a  corporation  organized  under  the  laws  of  the 
State  of  Delaware,  and  to  vote  or  use  the  stock  in  such  corpora- 
tion held  by  him  for  the  benefit  of  the  United  States  or  otherwise 
exercise  his  control  over  the  corporation  and  its  directors,  in  such 
a  manner  as  to  authorize  and  require  them  to  adopt  and  carry 
out  until  December  31,  1920,  plans  and  methods  of  securing,  if 
found  necessary  for  the  public  good,  an  adequate  supply  and  an 
equitable  distribution  of  sugar  at  a  fair  and  reasonable  price  to 
the  people  of  the  United  States.  Sections  5  and  10  of  the  Act 
entitled,  "An  Act  to  further  provide  for  the  national  security 
and  defense  by  encouraging  the  production,  conserving  the 
supply,  and  controlling  the  distribution  of  food  products  and 
fuel,"  approved  August  10,  1917,  as  far  as  the  same  relates  to 
raw  or  refined  sugar,  sirups,  or  molasses,  are  hereby  continued 
in  full  force  and  effect  until  December  31,  1920,  notwithstanding 
the  provisions  of  section  24  of  said  Act:  Provided,  That  the 
provisions  of  this  Act  shall  expire  as  to  the  domestic  product 
June  30,  1920.  And  provided  further,  That  the  zone  system  of 
sale  and  distribution  of  sugar  heretofore  established  by  the 
said  United  States  Sligar  Equalization  Board  <shall  be  abolished 
and  shall  not  be  reestablished  or  maintained,  and  that  sugars 
shall  be  permitted  to  be  sold  and  to  circulate  freely  in  every 
portion  of  the  United  States.  The  termination  of  this  Act  shall 
not  affect  any  act  done  or  any  right  or  obligation  accruing  or 
accrued,  or  any  suit  or  proceeding  had  or  commenced  in  any  civil 
case  before  the  said  termination  pursuant  to  this  Act ;  but  all 
rights  and  liabilities  under  this  Act  arising  before  its  termination 
shall  continue  and  may  be  enforced  in  the  same  manner  as  if  the 
Act  had  not  terminated.  Any  offense  committed  and  all  penalties, 
forfeitures,  or  liabilities  incurred  prior  to  such  termination  may 
be  prosecuted  or  punished  in  the  same  manner  and  with  the  same 
effect  as  if  this  Act  had  not  been  terminated. 


Il8       GOVERNMENT  CONTROL  OF  SUGAR 

In  the  period  of  about  three  months  which  elapsed  be- 
tween the  beginning  of  the  hearings  before  the  Senate 
committee  and  the  final  passage  of  the  Bill  by  Congress, 
several  notable  steps  towards  de-control  were  taken  by  the 
Board  in  cooperation  with  the  Attorney  General's  office. 
On  October  28,  Mr.  Zabriskie  in  a  letter  to  Mr.  Post,  — 
chairman  of  the  American  Refiners'  Committee,  — •  urged 
that  refiners  sell  any  supplies  of  new  crop  sugar  (which 
were  all  purchased  on  a  higher  basis  than  the  old  crop 
Cuban)  to  the  sugar-using  industries  and  to  sell  the  old 
crop  sugars  to  the  channels  of  trade  leading  to  the  retail 
grocer  in  order  that  the  housewives  might  obtain  the  small 
amounts  of  the  lower  priced  old  crop  sugars  which  were 
still  to  come  from  Cuba.  Inasmuch  as  the  sellers  of 
these  new  crop  sugars,  which  were  mostly  small  parcels 
of  Brazilians,  Peruvians,  and  other  full-duty  sugars, 
desired  prices  of  at  least  fourteen  or  fifteen  cents  duty- 
paid,  there  was  some  hesitation  on  the  part  of  the  trade 
to  buy  lest  the  Attorney  General  consider  these  prices 
evidence  of  profiteering.  Accordingly,  to  prevent  these 
sugars  seeking  other  markets  abroad,  the  Board  informed 
the  Attorney  General's  office  of  the  situation,  and  re- 
ceived in  reply  the  assurance  that  the  Department  of 
Justice  would  not  trouble  purchasers  of  these  higher 
priced  sugars,  provided  that  there  were  no  unreasonable 
margins  in  the  resale  thereof  to  domestic  consumers. 
This  incident  was  definitely  indicative  of  the  change 
from  a  specialized  control  over  sugar  prices  by  a  Govern- 
ment corporation  originally  created  to  regulate  that  one 
industry  only,  to  a  general  regulation  by  a  department 
of  the  Government  whose  powers  were  applied  uniformly 
to  all  industries.  Other  steps  in  this  direction  were  the 
activities  of  the  Attorney  General  in  relation  to  the  new 
crop  beet  sugar  prices  and  new  crop  Louisiana  cane  sugar. 

Concurrent  with  the  release  of  price  control  (except- 
ing that  over  the  refiners'  price  on  the  remnant  of  the 
old  crop  Cuban  sugars)  import  control  was  released. 


END  OF  GOVERNMENT  CONTROL  119 

On  November  8,  1919,  the  War  Trade  Board  Section 
of  the  Department  of  State  announced  that  after  Novem- 
ber 10,  1919,  free  importation  of  sugar  would  be  allowed 
from  all  countries  except  Cuba  and  Bolshevik  Russia. 
Supplementing  this  action,  upon  the  expiration  of  the 
Cuban  agreement  on  December  i,  1919,  it  was  announced 
that  free  importation  of  sugar  would  be  allowed  (ex- 
cepting, of  course,  Bolshevik  Russia).  On  December  31, 
1919,  the  contract  with  the  refiners  expired  and  Govern- 
ment control  of  the  sugar  industry  through  the  United 
States  Sugar  Equalization  Board  became  a  matter  of 
history. 

In  the  meantime,  the  McNary  Bill  had  been  passed 
to  the  President  for  his  signature.  After  obtaining  the 
opinion  of  the  Directors  of  the  Board  on  the  measure  1 
President  Wilson  signed  the  Bill  on  December  31,  1919, 
but  issued  a  statement  on  the  same  date  to  the  effect 
that  he  did  not  deem  it  advisable  to  utilize  the  authority 
conferred  upon  him  by  the  Bill  to  have  the  Board  pur- 
chase and  distribute  the  1920  Cuban  crop.  A  few  days 
later,  the  following  lengthy  statement  was  made  public 
at  the  White  House,  giving  in 'detail  the  opinion  of  the 
President : 

On  the  basis  of  the  facts  presented  and  the  conclusions 
reached  by  the  Sugar  Equalization  Board,  the  President  has 
decided  that  the  authority  conferred  by  the  McNary  sugar  act, 
passed  December  20,  so  far  as  it  involves  the  purchase  and  dis- 
tribution of  the  Cuban  crop  by  the  Government,  should  not  be 
exercised. 

The  matter  of  repeating  the  operation  of  the  Government's 
purchasing  and  controlling  the  Cuban  sugar  crop  for  another 
year  under  war  powers  came  up  for  active  consideration  in  August, 
1919.  At  that  time  there  was  an  expectation  that  the  treaty 
of  peace  with  Germany  would  be  ratified  within  a  reasonable  time 
and  that  peace  conditions  would  reappear.  There  appeared  to 
be  a  very  definite  view  on  the  part  of  Congressional  leaders  that 
the  exercise  of  war  power  should  not  be  extended  another  year. 

1  See  Appendix,  Exhibit  21,  for  the  letter  and  memorandum  giving  the 
Board's  viewpoint  on  the  McNary  Bill,  page  236. 


120      GOVERNMENT  CONTROL  OF  SUGAR 

There  was  dissent  by  one  member  of  the  Board  of  Equalization 
from  the  conclusion  reached  at  that  time  by  the  majority  of  the 
Board  that  the  control  should  be  further  exercised.  His  view 
was  that  it  was  desirable  to  return  to  normal  conditions  and  that 
a  beginning  in  respect  to  sugar  should  be  made.  The  majority 
of  the  Board  was  definitely  of  the  opinion  that  the  Cuban  crop 
should  not  be  bought  unless  it  was  clear  that  its  powers  of  con- 
trol over  sugar  would  be  effective,  and  this  could  not  be  made 
certain  without  action  by  Congress. 

The  President  had  not  reached  a  conclusion  in  the  matter 
when  he  started  on  his  Western  trip  and  was  taken  ill.  On 
October  3,  the  Equalization  Board,  through  its  President,  ex- 
pressed to  the  Senate  Committee  its  view  that  the  Cuban  crop 
for  1920  should  and  could  be  purchased  provided  the  powers  of 
control  heretofore  exercised  by  the  Board  were  continued  in 
full  until  December  31,  1920,  thus  enabling  the  Board  to  see  that 
the  consumers  should  secure  refined  sugar  at  a  reasonable  price. 
The  Board  at  that  time  felt  it  could  renew  its  contract  with  the 
Cuban  and  American  producers,  as  well  as  with  the  refiners. 
No  action  was  taken  by  the  Congress  until  December  20. 

Conditions  have  now  so  changed  that  the  members  of  the 
Board  do  not  believe  that  action  by  it  under  the  provisions  of 
the  Act  of  Congress  referred  to  offers  a  solution  of  the  problem  of 
securing  a  regular  supply  of  sugar  for  the  people  for  the  year  1920 
at  a  reasonable  price.  The  Board  has  had  no  contract  with  the 
Western  beet  or  the  Louisiana  sugar  cane  producers  for  the  new 
1919-20  crop,  which  began  to  come  into  the  market  in  the  fall  and, 
therefore,  from  about  October  15  the  control  which  the  Board 
could  exercise  applied  only  to  the  remainder  of  the  1919  Cuban 
sugar  crop  which  it  had  purchased  and  which  was  deliverable 
on  or  before  November  30,  1919.  A  considerable  quantity  of 
the  Cuban  crop  of  1920  has  already  been  sold  overseas  and  to 
American  refiners.  One  of  the  elements  which  helped  materially 
to  make  the  Board's  action  for  the  1919  crop  effective  no  longer 
exists.  The  Board  was  able  to  deal  with  the  unified  Cuban  sell- 
ing agency  for  the  1919  crop  and  to  secure  and  control  the  entire 
crops. 

Now  there  is  no  person  or  committee  authorized  to  sell  the 
balance  of  the  1920  Cuban  crop.  Therefore,  if  the  Government 
of  the  United  States  through  the  Board  should  appear  in  the 
Cuban  market  as  a  purchaser  of  the  sugar  it  would  have  to  buy 
in  individual  lots,  to  compete  with  private  buyers,  and  the  tendency 
would  be  to  strengthen  the  market  and  further  increase  the  price. 
Furthermore,  it  would  be  compelled  to  buy  sugar  at  the  time  of 
the  most  adverse  market  conditions  and  maximum  prices  and  to 


END  OF  GOVERNMENT  CONTROL       121 

seek  to  stabilize  the  price  on  the  basis  of  this  maximum  or  risk 
a  very  considerable  financial  loss. 

Furthermore,  the  Act  of  Congress  limits  the  control  of  the 
Board  over  domestic  sugars  to  June  30,  1920,  and  should  the 
Board  succeed  in  purchasing  a  large  quantity  of  Cuban  sugar  for 
delivery  throughout  the  year  1920,  the  Board  would  find  itself 
in  the  position  of  trying  to  maintain  a  uniform,  reasonable  price 
over  the  whole  country  with  no  control  whatsoever  over  the  large 
quantities  of  sugar  from  Hawaii  and  Porto  Rico,  which  come  in 
mainly  after  June  30,  and  over  the  new  Louisiana  cane  and 
Western  beet  sugars,  and  this  too  at  the  time  of  the  year  when, 
if  at  all,  absolute  control  of  all  sugars  by  the  Board  would  be 
essential. 

In  addition,  the  Act  forbids  the  Board  from  putting  into 
effect  its  present  system  of  zone  distribution,  under  which  con- 
sumers get  their  supply  from  the  nearest  and  most  convenient 
points  of  production.  This  system  was  most  useful  during  the 
year  1919  in  effecting  a  fair  distribution  of  the  available  sugar. 
The  conditions  in  the  United  States  in  respect  to  sugar  are  such 
for  January,  February,  and  March  that  there  would  be  little  hope 
of  the  Board's  being  able  to  reduce  the  price  of  sugar  by  purchasing 
the  Cuban  crop  and  attempting  to  reestablish  control  of  the 
industry.  It  is  possible  that  when  the  flow  of  raw  sugars  from 
the  large  crops  of  Cuba  and  Porto  Rico  reaches  its  peak  in  March 
and  April  prices  may  be  somewhat  reduced.  The  refiners'  price 
is  now  15.20  per  pound  wholesale,  which  is  a  considerable  reduc- 
tion from  the  first  offerings  of  sugar  refined  from  new  cane  sugars. 
The  offerings  of  refined  sugars  for  February  deliveries  are  at 
13.50  cents  per  pound  wholesale,  with  still  further  reductions  for 
March,  which  indicates  a  tendency  in  the  industry  towards  settling 
down  to  normal  conditions. 

The  recent  Act  keeps  alive  the  licensing  power  of  the  Board, 
providing  that  whenever  the  President  shall  find  that  any  storage 
charge,  commission,  profit  or  practice  of  any  licensee  is  unjust  or 
unreasonable  or  discriminatory  or  unfair  he  may  order  the  dis- 
continuance of  the  same  and,  if  necessary,  find  what  is  a  just  and 
fair  charge,  profit  or  practice.  This  power  will  be  invoked  if 
necessary  and  exercised  in  cooperation  with  the  Department  of 
Justice,  will  be  of  assistance  in  preventing  profiteering. 

Apparently  the  supply  of  sugar  available  for  consumption 
in  the  United  States  will  be  sufficient  to  meet  the  demands  of 
the  consumers,  even  on  the  present  unnecessary  large  basis  of 
consumption.  The  United  States,  it  is  estimated,  consumed 
in  1919  about  92  pounds  for  each  person  as  against  a  normal 
consumption  of  85  pounds.  It  consumed  600,000  tons  of  sugar 


122      GOVERNMENT  CONTROL  OF  SUGAR 

more  than  in  1918  and  300,000  tons  more  than  were  ever  used 
in  the  history  of  the  country.  It  consumed,  therefore,  over 
9,000,000,000  pounds  of  sugar,  or  slightly  more  than  4,500,000 
tons.1  Of  this,  it  normally  produces  1,000,000  tons.  The  Cuban 
crop  is  unusually  large  —  about  4,800,000  tons.  The  crops  for 
Louisiana,  the  West,  Porto  Rico  and  Hawaii  will  aggregate  ap- 
proximately 2,000,000  tons.  Of  the  Cuban  crop,  it  is  estimated 
that  the  Allies  will  take  approximately  1,250,000  tons.  They 
might  take  more  but  for  the  fact  that  their  aggregate  purchasing 
power  is  limited  and  they  must  use  it  not  only  for  sugar  but  for 
many  other  foodstuffs  and  many  raw  materials  and  manufactured 
commodities.  It  is  apparent,  therefore,  that  the  amount  of  sugar 
from  which  America  draws  her  supplies  will  be  large.  .  .  . 

Shortly  after  the  issuance  of  the  above  statement  the 
President  of  the  Board  addressed  the  following  letter 
to  the  President  of  the  United  States  notifying  him  that 
the  Board  was  proceeding  with  the  liquidation  of  its 
affairs  with  complete  dissolution  as  its  aim,  since  there 
was  no  further  function  for  it  to  perform. 

JANUARY  16,  1920. 
To  His  Excellency 

The  President  of  the  United  States 
The  White  House 

Washington,  D.  C. 
My  dear  Mr.  President: 

The  Board  is  in  receipt  of  the  statement  from  the  White  House 
dated  January  3,  1920,  advising  us  that  the  President  had  de- 
cided not  to  exercise  the  authority  given  him  by  the  McNary 
Act  in  respect  to  the  purchase  and  distribution  of  the  present 
Cuban  raw  sugar  crop.  In  this  policy  the  members  of  the  Board 
concur  for  the  reasons  stated  in  our  communication  to  Secretary 
Houston  of  January  2d. 

The  Sugar  Equalization  Board  was  created  primarily  for  the 
purpose  of  purchasing  and  distributing  the  1918-19  raw  sugar 
crop.  This  has  now  been  completed.  In  view  of  the  decision 
from  the  White  House,  the  members  of  the  Board  conclude  that 
there  are  no  further  duties  for  it  to  perform,  except  to  proceed 
with  the  liquidation  of  its  affairs  in  preparation  for  a  dissolution. 
The  Board  is  acting  accordingly. 

In  the  statement  from  the  White  House  referred  to,  we  find  the 
following  in  reference  to  the  McNary  Act : 

1  Short  tons.  : 


END  OF  GOVERNMENT  CONTROL       123 

"The  recent  Act  keeps  alive  the  licensing  power  of  the  Board." 
We  desire  to  point  out  that  the  Board  has  never  had  the  power 
of  licensing  and  the  other  methods  of  control  given  originally 
by  the  Food  Control  Act  and  continued  hi  part"  by  the  McNary 
Act  through  the  year  1920.  The  operations  of  the  Sugar  Board 
have  been  based  on  voluntary  arrangements  and  agreements  with 
producers  and  refiners  and  without  the  use  of  any  licensing  au- 
thority. The  licensing  and  other  control  methods  of  the  Food 
Control  Act  were  in  the  Food  Administration,  and  some  months 
ago  were  lodged  in  the  Department  of  Justice.  That  Depart- 
ment now  has  the  sole  authority  in  respect  to  licensing,  hoarding, 
profiteering  and  unfair  practices,  over  all  foods  including  sugar, 
and  these  administrative  and  regulatory  powers  are  now  being 
exercised  by  it ;  it  could  also  establish  a  rationing  plan  if  such 
drastic  control  seems  to  the  Government  advisable. 
Yours  very  truly, 

(Signed)  Geo.  A.  Zabriskie, 
President  U.  S.  Sugar  Equalization  Board,  Inc. 

A  reply  was  received  on  January  30,  1920,  from 
Mr.  Tumulty,  acting  on  behalf  of  the  President,  stating 
that  in  view  of  all  the  circumstances,  it  seemed  proper 
to  proceed  with  the  liquidation  of  the  Sugar  Board. 

There  remained  at  this  date,  January  30,  1920,  but 
two  vestiges  of  the  war  time  control  of  the  industry. 
First,  dealings  in  sugar  futures  on  the  New  York  Coffee 
and  Sugar  Exchange  had  not  yet  been  resumed.  These 
operations  in  futures,  it  will  be  recalled,  had  been  sus- 
pended by  Mr.  Hoover  on  August  16,  1917.  Secondly, 
the  statistical  control  of  the  sugar  industry  which  had 
existed  all  through  1918-19  was  still  in  operation. 
Following  an  exchange  of  communications  among  the 
Board,  the  Attorney  General,  and  the  Board  of  Managers 
of  the  New  York  Coffee  and  Sugar  Exchange,  trading 
in  sugar  futures  was  reestablished  on  February  16, 
1920.  The  trade  rules,  however,  were  amended  by  the 
Board  of  Managers  so  that  daily  fluctuations  were 
restricted  to  one  cent  per  pound  as  compared  with  the 
close  of  the  previous  day  and  also  between  the  high  and 
low  prices  for  any  one  day. 


124      GOVERNMENT  CONTROL  OF  SUGAR 

Although  the  Board's  contract  with  the  refiners  ex- 
pired on  December  31,  1919,  and  it  had  no  legal  power 
to  compel  refiners  to  make  statistical  reports,  it  was 
deemed  best  to  request  them  to  continue  submitting 
their  usual  reports  of  weekly  receipts,  stocks,  and 
meltings  until  it  was  ascertained  definitely  what  powers 
under  the  McNary  Act  the  President  of  the  United 
States  wished  the  Sugar  Board  to  exercise.  One  refiner, 
however,  refused  to  make  reports  and  since  it  became 
clear  by  the  end  of  January  that  the  only  task  facing 
the  Board  was  that  of  liquidation,  the  system  of  reports 
was  discontinued  at  the  end  of  February. 

By  March  first,  therefore,  all  evidence  of  Government 
control  had  been  removed  and  the  sugar  industry  was 
subject  only  to  those  provisions  of  the  Lever  Act  which 
the  Attorney  General  enforced  upon  all  food  industries. 
At  the  present  writing  the  various  branches  of  the  trade 
are  functioning  as  in  prewar  times,  while  the  Sugar 
Board  is  in  process  of  liquidation.  As  an  evidence  of 
this  restoration  to  normal  conditions,  it  is  of  interest  to 
note  the  trend  of  sugar  prices.  In  the  latter  part  of 
December,  1919,  Cuban  new  crop  raws  were  being  sold 
at  13.55  cents  per  pound,  duty-paid,  while  present  quo- 
tations are  at  10  cents,  showing  a  decline  of  about  3! 
cents  from  the  high  record  then  established.1 

1  Since  the  above  was  written  the  duty-paid  price  of  Cuban  raws  soared  to 
$23.57  per  hundred  pounds  and  then  dropped  to  $13.04.  Whether  this  is  a 
temporary  or  permanent  level  for  the  balance  of  the  crop  year,  is  at  present 
writing  uncertain.  The  cause  of  this  unprecedented  increase  is  a  decline  in  the 
crop  of  about  700,000  tons  on  account  of  a  serious  drought. 


CHAPTER  IX 

CONCLUSION 

IN  the  preceding  pages,  the  work  of  the  Food  Ad- 
ministration and  the  Sugar  Board  has  been  given  in 
detail,  showing  the  manner  hi  which  mobilization  of  the 
sugar  industry  for  war  purposes  was  effected  and  how 
the  restoration  to  prewar  conditions  was  finally  brought 
about  in  the  face  of  extremely  trying  economic  and 
political  conditions.  It  is  now  possible  to  summarize 
and  evaluate  in  some  degree  the  policies  and  activities 
of  the  Food  Administration  and  the  United  States 
Equalization  Board  in  their  control  of  the  sugar  in- 
dustry and  trade. 

In  1918,  when  conservation  of  sugar  was  a  necessity, 
the  Sugar  Board,  in  cooperation  with  the  Food  Admin- 
istration, through  supervision  of  distribution,  brought 
about  a  saving  of  about  600,000  long  tons  or  about 
1,300,000,000  pounds.  But  in  1919,  when  the  war 
emergency  no  longer  compelled  conservation  measures, 
the  Board  provided  about  400,000  tons  more  than  the 
previous  maximum  record  for  consumption  hi  the  United 
States  and  about  600,000  tons  more  than  the  normal 
consumption  of  the  preceding  five  years.  Owing  to  the 
depleted  supplies  in  1918,  on  the  one  hand,  and  the 
abnormal  demand  for  sugar  in  1919,  on  the  other  hand, 
a  shifting  of  supplies  from  regions  of  plenty  to  regions 
of  scarcity  was  imperative.  Such  measures  were  requi- 
site under  the  existing  stabilized  price  conditions  which 
prevented  the  normal  movement  of  sugar  from  one  region 
to  another  under  the  stimulus  of  higher  prices  in  regions 
of  scarcity.  A  total  of  89,428  tons  was  thus  moved. 

125 


126  GOVERNMENT  CONTROL  OF  SUGAR 

The  total  quantity  of  sugar  which  was  either  directly  a 
purchase  of  the  Board  or  which  came  under  the  jurisdic- 
tion of  the  Board  and  was  directly  involved  in  its 
operations  amounted  to  over  7,000,000  tons,  having  a 
value  of  over  one  billion  dollars. 

It  is  important  to  note  that  in  the  face  of  a  world 
shortage  in  production  of  about  2,000,000  tons  the 
Sugar  Board  obtained  for  domestic  consumption  in  1919 
an  amount  equal  to  one-half  of  the  world's  exportable 
surplus,  or  one-quarter  of  the  world's  production  for  the 
year,  whereas  in  normal  times  the  United  States  con- 
sumes only  about  one-fifth  of  the  world's  production. 

WHOLESALE  PRICES  or  REFINED  SUGAR  IN  VARIOUS  FOREIGN 
COUNTRIES  AS  OF  JULY,  1919 

(Normal  Rate  of  Exchange) 

POTTO-TRY  PRICE  IN  CENTS 

PER  POUND 

Belgium 15.5 

Bulgaria 438.0 

Canada io-45 

Cuba 8.82 

Denmark '.'-'.     .     .        8.51 

France 16.80 

Germany .     .     .  11.73 

German  Austria 41.00 

Holland 10.21 

Hungary 12.28 

India 12.99 

Italy 30.29 

Japan 19.8 

Java 10.67 

Norway 15-7° 

Poland 18  to  27 

Portugal 23.6 

Spain .  14.61 

Sweden 16.05 

Switzerland 13.00 

Ukraine 75-20$ 

United  Kingdom 12.52 

United  States   ....  8.82 


CONCLUSION  127 

Yet  in  spite  of  this  large  demand  and  short  supply, 
the  consumer  in  the  United  States  paid  less  for  his  sugar 
than  the  consumer  in  any  country  abroad  except  Den- 
mark. The  table  on  the  preceding  page  compares  the 
wholesale  price  of  refined  sugar  in  the  United  States 
with  the  prices  ruling  in  other  countries  in  July,  1919. 
This  table  is  illustrative  of  the  situation  during  the  entire 
war  period. 

It  is  quite  conservative  to  assume,  judging  by  experi- 
ence since  removal  of  control  and  from  the  above 
table  of  world  prices,  that  the  retail  price  of  sugar  under 
free  market  conditions  would  have  averaged  15  cents  per 
pound  from  January,  1918,  to  October,  1919,  taking  only 
the  period  when  complete  control  existed.  According 
to  the  figures  of  the  Department  of  Labor,  the  average 
retail  price  in  the  United  States  for  this  period  was  10 
cents  per  pound.  On  this  basis,  since  the  consumption 
for  the  period  was  about  6,700,000  long  tons  the  saving 
effected  reached  the  enormous  total  of  $750,000,000  or 
over  $7  per  capita.  Nor  was  the  stabilized  price  unfair 
to  producer  or  refiner,  since  as  explained  in  detail  above, 
determination  of  a  proper  price  followed  careful  scrutiny 
of  figures  of  costs  of  production  submitted  by  producers 
and  refiners  and  such  prices  were  based  on  the  acceptance 
of  the  principle  that  stimulation  of  production  was  emi- 
nently desirable.  For  example  the  beet  farmers  of  the 
United  States  received  an  average  price  of  $10  per  ton 
for  beets  in  1918  as  against  $6.12  in  1916,  an  increase  of 
63  per  cent,  while  beet-sugar  manufacturers  received  an 
average  of  $8.12  per  100  pounds  in  1918  as  compared 
with  $6.98  in  191^,  an  increase  of  16  per  cent.  Similar 
increases  were  obtained  by  the  American  refiners,  the 
Louisiana  sugar  producers,  the  Cubans,  the  Hawaiians, 
the  Porto  Ricans,  in  accordance  with  their  respective  in- 
creasing costs. 

A  few  words  as  to  the  effect  of  Government  control  on 
sugar  production  will  be  pertinent.  The  production  of 


128 


GOVERNMENT  CONTROL  OF  SUGAR 


the  United  States  and  Cuba  from  prewar  years  to  date 
are  given  in  the  following  table : 

Unit:  Long  Tons 


CROP  YEAR 

UNITED  STATES 

PORTO 
Rico 

HAWAII 

CUBA 

TOTAL 

Louisiana 

Beet 

1914-15 

216,696 

646,257 

308,178 

577,186 

2,592,667 

4,340,984 

1915-16 

122,768 

779,756 

431,335 

529,895 

3,007,915 

4,871,669 

1916-17 

27^339 

734,577 

448,567 

575,510 

3,023,720 

5,053,713 

1917-18 

217,499 

682,867 

413,958 

515,035 

3,446,083 

5,275,442 

1918-19 

250,802 

674,892 

362,618 

538,913 

3,971,776 

5,799,001 

I9I9-201 

103,202 

650,000 

426,631 

500,000 

4,435,714 

6,H5,547 

The  above  figures  show  the  tremendous  increase  in  the 
production  which  resulted  during  the  period  of  Govern- 
ment control  in  Cuba  against  which  increase  the  slight  de- 
creases in  the  other  sources  of  supply  were  negligible.  A 
much  higher  price  than  that  which  prevailed  in  1918  and 
1919  might  have  conceivably  increased  production  in  the 
United  States  beet  industry,  Porto  Rico,  and  Hawaii  to 
the  extent  of  a  few  hundred  thousand  tons,  but  the  wiser 
policy  was  adopted  of  assuming  a  price  level  which  would 
encourage  production  in  the  only  source  of  supply  where 
large  increases  could  be  immediately  expected  in  response 
to  relatively  small  price  increases,  that  is  in  Cuba. 

Government  control  of  the  sugar  industry  and  trade 
in  the  war  period  and  in  the  year  of  reconstruction 
which  followed,  is  an  interesting  example  of  wholesome 
and  effective  cooperation  between  business,  the  general 
public,  and  a  Government  organizati*  >,  functioning  in  a 
period  of  national  stress  and  world  upheaval.  In  order 
that  the  experiences  and  information  derived  in  the 
period  of  control  might  not  be  lost  to  the  general  public, 
the  Directors  of  the  United  States  Sugar  Equalization 
Board  have  authorized  the  publication  of  this  book. 

Preliminary  figures. 


APPENDIX 


APPENDIX 


TABLE   OF   CONTENTS 

THE    CONTRACTS    BETWEEN    THE    PRODUCERS    OR 

REFINERS  AND   THE  UNITED   STATES 

GOVERNMENT 

Exhibit  i,  Agreement  as  to  Cuban  Sugars,  1917-18  crop,  of 
December  24,  1917. 

Exhibit  2,  United  States  Refiners'  Raw  Sugar  contract  terms, 
Cubas  —  cost  and  freight. 

Exhibit  3,  Conditions  of  the  usual  contract  form  of  the  Royal 
Commission  on  the  Sugar  Supply. 

Exhibit  4,  Agreement  between  Herbert  Hoover  and  the  Re- 
finers of  October  i,  1917. 

Exhibit    5,  Agreement  with  Beet-Sugar  Producers,  1917-18  crop. 

Exhibit  6,  Agreement  as  to  Cuban  Sugars,  1918-19  crop,  be- 
tween U.  S.  Sugar  Equalization  Board,  Inc.  and 
a  commission  of  the  Republic  of  Cuba  and  agents 
of  Cuban  Producers. 

Exhibit  7,  Authorization  to  sell  under  Agreement  as  to  Cuban 
Crop  of  1918-19. 

Exhibit  8,  Agreement  between  the  U.  S.  Sugar  Equalization 
Board,  Inc.  and  Herbert  Hoover,  U.  S.  Food 
Administrator,  and  U.  S.  Sugar  Refiners,  October 
24,  1918. 

Exhibit  9,  Agreement  with  the  U.  S.  Food  Administrator  as  to 
sale  and  distribution  of  beet-sugar  crop,  1918-19, 
September  18,  1918. 

Exhibit  10,  Agreement  with  U.  S.  Food  Administration  as  to 
Louisiana  Sugars,  October,  1918. 

Exhibit  n,  Assignment  to  the  Royal  Commission  on  the  Sugar 
Supply  by  the  U.  S.  Sugar  Equalization  Board, 
Inc.  of  its  Rights  to  one-third  of  the  Sugar  pur- 
chased under  Agreement  as  to  Cuban  Sugars,  crop 
1918-19,  October  24,  1918. 

Exhibit  12.  Option  given  to  Royal  Commission  on  the  Sugar 
Supply  by  Refiners  of  the  United  States  for  the 


132  APPENDIX 

Refining   of   321,000    tons    Cuban    Raw    Sugar, 
November  22,  1918. 

Exhibit  13,  Letter  confirming  the  increase  from  321,000  tons  raw 
sugar  (300,000  tons  refined)  to  535,000  tons  raw 
sugar  (500,000  tons  refined)  to  be  refined  for 
Royal  Commission,  April  30,  1919. 

CERTIFICATE    OF    INCORPORATION    AND    BY-LAWS 
OF  THE  U.  S.   SUGAR  EQUALIZATION  BOARD,  INC. 

Exhibit  14,  Certificate  of  Incorporation. 
Exhibit  15,  By-Laws. 

Exhibit  1 6,  Letter  from  President  Wilson  authorizing  the  forma- 
tion of  the  U.  S.  Sugar  Equalization  Board,  Inc. 

IMPORTANT  LETTERS  AND   MEMORANDA 

Exhibit  17,  Letter  from  President  of  the  Board  to  War  Trade 
Board  urging  the  reimposition  of  wartime  control 
over  exports  of  refined  sugar  from  the  United 
States,  July  29,  1919. 

Exhibit  18,  Memorandum  from  Dr.  Raymond  Pearl  re  the  Im- 
portance of  Sugar  as  Food,  August  9,  1918. 

Exhibit  19,  Letter  from  Messrs.  R.  B.  Hawley  and  Manuel 
Rionda  to  Mr.  Zabriskie  on  July  29,  1919,  tender- 
ing the  Cuban  Crop  of  1919-20  to  the  U.  S.  Sugar 
Equalization  Board,  Inc. 

Exhibit  20,  Letter  from  Messrs.  R.  B.  Hawley  and  Manuel 
Rionda  of  September  22,  1919  to  Mr.  Zabriskie 
withdrawing  tender  of  1919-20  crop. 

Exhibit  21,  Letter  and  memorandum  to  the  U.  S.  Secretary  of 
Agriculture  giving  the  Board's  attitude  on  the 
McNary  Bill. 

*STATISTICAL  TABLES  OF  THE  SUGAR  INDUSTRY 
OF  THE  UNITED   STATES 

Exhibit  22,  Receipts  and  meltings  for  each  refinery  for  years 

1918  and  1919. 
Exhibit  23,  Shipments  of  sugar  refined  for  Royal  Commission  in 

1919,  by  each  refiner. 
Exhibit  24,  Shipments  of  sugar  by  refiners  exclusive  of  Royal 

Commission  sugars,  1919. 
Exhibit  25,  Basic  Statistical  Data  of  the  U.  S,  Sugar  Industry 


APPENDIX  133 

for  the  years  1919  and  1918  compared  (as  issued 
by  the  Statistical  Dep't  of  the  U.  S.  Sugar  Equali- 
zation Board,  Inc.). 

Exhibit  26,  Sugars  supplied  for  the  Army,  Navy,  and  various 
relief  organizations. 

STATISTICS  OF  THE  WORLD'S  SUGAR  INDUSTRY 

Exhibit  27,  Effect  of  the  War  on  World's  Sugar  Production. 
Exhibit  28,  Effect  of  the  War  on  World's  Exports. 
Exhibit  29,  Effect  of  the  War  on  World's  Imports. 


EXHIBIT  1 

AGREEMENT  AS  TO  CUBAN  SUGARS 
1917-1918  CROP 

Agreement  entered  into  this  24th  day  of  December, 
1917,  in  the  City  and  State  of  New  York,  by  and  between 
the  INTERNATIONAL  SUGAR  COMMITTEE  of  the  UNITED 
STATES  FOOD  ADMINISTRATION,  a  CUBAN  COMMISSION  and 
a  CUBAN  COMMITTEE  FOR  ARRANGING  COMMERCIAL 
TERMS  appointed  by  the  President  of  the  Republic  of 
Cuba,  AGENTS  OF  VARIOUS  CUBAN  PRODUCERS  acting 
severally  for  the  producers  of  sugar  in  the  Island  of 
Cuba,  THE  ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY 
and  REFINERS  of  sugar  in  the  United  States,  acting 
severally,  signatory  hereto,  WITNESSETH  : 

WHEREAS,  pursuant  to  an  Act  of  Congress,  duly  ap- 
proved on  the  loth  day  of  August,  1917,  and  an  Executive 
Order  of  the  President  of  the  United  States  of  the  same 
date,  the  United  States  Food  Administration  has  been 
created  and  Herbert  Hoover  has  been  appointed  United 
States  Food  Administrator ;  and 

WHEREAS,  the  said  United  States  Food  Adminis- 
trator has  appointed  George  M.  Rolph,  Earl  D.  Babst, 
William  A.  Jamison,  Sir  Joseph  White-Todd  and 
J.  Ramsay  Drake  a  Committee  of  the  United  States 
Food  Administration  called  the  International  Sugar 
Committee,  with  headquarters  in  New  York,  to  co- 
operate with  The  Royal  Commission  on  The  Sugar 
Supply,  of  London,  England,  and  to  arrange  for  the 
purchase  of  the  imported  raw  sugar  requirements  of  the 

136 


EXHIBIT   1  137 

United  States  of  America  and  of  other  Nations  at  war 
with  Germany ;  and 

WHEREAS,  all  refiners  of  sugar  in  the  United  States 
have  heretofore  entered  into  contracts  with  the  said 
United  States  Food  Administrator,  in  the  form  of  that 
annexed  and  marked  Exhibit  A,  to  arrange  for  the  pur- 
chase of  raw  sugar  through  the  said  International  Sugar 
Committee  and  the  sale  of  the  same  at  a  maximum  re- 
fining margin,  and  the  American  Refiners'  Committee 
named  in  the  said  Exhibit  has  fixed  the  basis  of  propor- 
tionate distribution  of  the  said  sugar  so  purchased  as  is 
set  forth  in  Exhibit  B  annexed  hereto  (both  Exhibit  A 
and  Exhibit  B  are  made  a  part  hereof) ;  and 

WHEREAS,  the  President  of  the  Republic  of  Cuba  has 
appointed  Carlos  Manuel  de  Cespedes,  Ernesto  Longa, 
Miguel  Mendoza,  Hannibal  J.  De  Mesa  and  Jose  M. 
Tarafa,  a  Cuban  Commission  to  arrange  for  the  sale  of 
sugar  produced  in  the  Island  of  Cuba  during  the  crop 
season  1917-1918  and  has  also  appointed  Robert  B. 
Hawley  and  Manuel  Rionda  a  Cuban  Committee  for 
Arranging  Commercial  Terms  of  sale  of  such  sugar; 
and 

WHEREAS,  the  said  Cuban  Commission  have  repre- 
sented that  there  is  power"  and  purpose  in  the  Govern- 
ment of  the  Republic  of  Cuba  to  co-operate  in  the  es- 
tablishment of  a  stabilized  price  for  a  part  or  whole  of 
the  Cuban  crop  of  1917-1918,  as  well  as  for  providing 
for  its  sale  through  and  under  the  authority  of  a  desig- 
nated entity,  such  as  the  International  Sugar  Com- 
mittee, and  also  to  control  by  license  the  export  of 
any  Cuban  sugar  to  any  person,  entity  or  country 
under  specified  terms  and  conditions,  including  price; 
and 

WHEREAS,  the  said  International  Sugar  Committee 
and  the  said  Cuban  Commission  in  co-operation  with 
the  other  parties  hereto  have  arranged  for  the  purchase 
and  sale  of  sugar  produced  in  the  Island  of  Cuba  during 


138  APPENDIX 

the  crop  season  1917-1918,  upon  the  terms  and  con- 
ditions hereinafter  stated ; 

Now,  THEREFORE,  the  parties  hereto  each  for  him- 
self for  the  part  to  be  performed  by  him  agrees  as  follows  : 


The  said  Cuban  Commission  will  immediately  procure 
that  each  and  every  producer  of  sugar  in  Cuba,  desirous 
of  availing  himself  of  the  terms  and  conditions  of  this 
agreement,  shall  duly  authorize  an  agent  in  the  City  of 
New  York  (hereinafter  called  the  Seller)  to  contract  for 
and  sell  to  the  International  Sugar  Committee  (herein- 
after called  the  Buyer)  as  it  may  require  an  estimated 
seventy-five  (75)  per  cent  of,  or  at  the  Buyer's  option  as 
detailed  herein,  his  or  their  output  of  sugar  deliverable 
for  export  f.  o.  b.  at  shipping  ports  in  Cuba  and  c.  &  f. 
for  United  States  ports  proportionately  as  hereinafter 
stated ;  said  authority  to  be  in  writing  and  filed  with  the 
Buyer  and  shall  state  the  name  and  location  of  factory  or 
factories  of  the  said  producers  and  the  estimated  pro- 
duction of  each  during  the  crop  season  1917-1918;  it 
being  understood  that  an  estimated  seventy-five  (75)  per 
cent  of  the  total  amount  of  the  sugar  to  be  produced 
will  aggregate  about  2,500,000  tons  of  2240  pounds  each. 
The  Buyer  shall  give  the  Seller  a  statement  of  the  said 
authorizations. 


II 

Pursuant  to  the  said  authorizations  the  Seller  agrees 
to  sell  and  to  deliver  and  the  Buyer  agrees  to  purchase 
and  to  receive  as  it  may  require  raw  sugar  produced 
in  the  Island  of  Cuba  during  the  crop  season  of  1917- 
1918  up  to  a  quantity  of  2,500,000  tons,  of  2240  pounds 
each. 


EXHIBIT   1  139 

III 

About  one-third  of  the  aforesaid  amount  is  purchased 
by  the  Buyer  for  the  account  of  The  Royal  Commission 
on  The  Sugar  Supply  for  shipment  to  Europe  at  the 
agreed  prices  of  4.60  cents  per  pound  f.  o.  b.  Northern 
Ports,  or  4.55  cents  per  pound  f.  o.  b.  South  Side  Ports 
basis  for  96°  centrifugal  sugar  subject  to  all  the  con- 
ditions of  the  usual  contract  form  of  The  Royal  Com- 
mission on  The  Sugar  Supply,  a  copy  of  which  is  hereto 
attached  and  made  a  part  hereof. 

The  Royal  Commission  on  The  Sugar  Supply  will  use 
its  best  endeavors  to  have  vessels  in  Cuba  to  ship  this 
sugar  as  follows :  30/50,000  tons  not  later  than  Janu- 
ary 15,  1918;  50,000  tons  not  later  than  January  31, 
1918,  and  thereafter  at  the  rate  of  about  80/100,000 
tons  per  month  from  February  i,  1918. 

The  remaining  two-thirds  the  Buyer  agrees  to  pur- 
chase as  it  may  require  for  the  account  of  the  United 
States  refiners,  parties  hereto,  and  the  Seller  agrees  to 
ship  the  same  at  the  price  of  4.98^  cents  per  pound 
c.  &  f.  to  New  York/Philadelphia,  subject  to  United 
States  Refiners'  contract  terms,  a  copy  of  which  is 
hereto  attached  and  made  a  part  hereof,  and  subject  to 
arrangement  of  freights. 

Shipments  to  the  United  States  Ports  are  to  be  made 
as  soon  as  possible  and  not  less  than  2  per  cent  of  the 
amount  during  December,  1917;  the  balance  in  ap- 
proximate equal  monthly  shipments  from  January  to 
November,  1918,  both  inclusive. 

The  Buyer  reserves  the  right  to  order  larger  quantities 
shipped  in  any  month  to  the  United  States  and  to  Europe 
if  tonnage  is  obtainable  and  sugar  is  produced  and 
available. 

IV 

The  Seller  agrees  to  the  Buyer  having  the  option  to 
purchase  part  or  all  of  any  balance  of  sugar  produced  by 


140  APPENDIX 

the  Seller  or  his  principals,  and  available  at  Cuban  ports 
beyond  the  2,500,0x30  tons  named  (not  exceeding  about 
one- third  thereof  for  shipment  to  Europe),  on  the  same 
terms  and  at  the  same  prices  of  4.98^  c.  &  f.  to  New 
York/Philadelphia,  anci  if  for  Europe,  4.60  north  side 
Cuba  and  4.55  south  side  Cuba  f.  o.  b. 

Said  options  to  be  declared  on  or  before  the  fifteenth 
days  of  June,  July  and  August,  1918,  respectively,  the 
declaration  at  any  date  to  be  up  to  a  quantity  equal  to 
10%  of  the  2,500,000  tons  referred  to  herein,  namely, 
250,000  tons  ;•  each  producer  represented  by  the  Seller  to 
participate  in  said  options  in  proportion  to  his  allotment 
of  the  original  2,500,000  tons. 

A  further  option  is  given  by  the  Seller  to  be  declared 
on  or  before  August  15^1918,  for  the  balance  of  the  crop 
already  made  or  to  be  made  by  the  Seller  or  his  prin- 
cipals during  the  crop  year  1918. 

In  the  event  that  the  Buyer  does  not  avail  of  the  above 
options  seriatim,  then  the  Seller  is  free  to  dispose  of  any 
sugar  not  so  taken,  but  always  subject  to  the  provisions 
of  Paragraph  5  herein  and  to  all  other  provisions  of  this 
agreement.  In  filling  United  States  requirements  the 
Buyer  on  equal  terms  agrees  to  take  the  sugar  of  the 
Seller  in  preference  to  other  sugar  except  that  produced 
in  the  West  Indies,  in  the  United  States  and  its  Insular 
Possessions. 

V 

At  the  request  of  the  Cuban  Committee  for  Arranging 
Commercial  Terms,  the  following  indented  clause  is 
made  a  condition  hereof : 

This  contract  is  negotiated  in  reliance  on  the 
representations  of  the  Cuban  Commission  that  all 
sugars  of  the  1917-1918  crop,  shipped  from  the 
Island  of  Cuba,  shall  be  by  persons,  firms  or  corpora- 
tions duly  authorized  and  licensed  by  the  Cuban 
Government,  upon  the  express  condition  that  they 


EXHIBIT   1  141 

shall  not  sell  or  deliver  for  export  at  any  less  prices 
than  the  prices  agreed  upon  herein,  so  long  as  there 
shall  remain  undelivered  any  portion  of  the  2,500,000 
tons  or  any  balance  covered  by  any  of  the  options 
detailed  herein. 

In  the  event  of  failure  on  the  part  of  the  Cuban  Gov- 
ernment to  take  said  above  action  or  in  the  event  of  the 
inoperation,  rescission  or  suspension  of  such  action,  it  is 
agreed  that  the  Buyer  shall  have  the  right,  immediately 
upon  notice  in  writing  to  the  Seller,  to  apply  any  lower 
prices  established  as  to  any  bonafide  sale  for  export  from 
Cuba,  to  any  portion  of  the  said  2,500,000  tons  or  of  any 
balance  covered  by  any  of  the  options  detailed  herein, 
remaining  in  and  not  cleared  from  Cuba. 

It  is  agreed,  however,  that  sales  with  the  consent  of  the 
Cuban  Government  may  be  made  on  terms  not  incon- 
sistent herewith  to  Spain  or  to  Pan-American  countries, 
up  to  a  total  of  50,000  tons. 

\ 

VI 

The  parties  obligated  thereto  will  use  due  diligence  and 
every  effort  to  provide  tonnage,  but  are  released  from  re- 
sponsibility by  acts  or  circumstances  beyond  their 
control. 

VII 

The  Seller  undertakes  all  lighterage  charges  and  all 
customary  shipping  expenses,  and  also  all  Cuban  taxes 
both  domestic  and  export. 

The  Seller  also  undertakes  to  pay  all  customary  ex- 
penses, at  the  port  of  discharge,  including  a  customary 
brokerage  to  be  calculated  on  the  average  tons  of  Cuban 
sugar  handled  by  brokers  in  the  United  States  heretofore 
acting  in  their  legitimate  capacity  as  brokers  in  the  three- 
year  period  of  1915-16-17. 


142  APPENDIX 

The  Seller  further  agrees  to  pay  a  commission  of  one- 
half  of  one  per  cent,  on  the  part  allocated  to  the  account 
of  The  Royal  Commission  on  The  Sugar  Supply. 

VIII 

In  the  event  of  any  steamer  being  lost  its  cargo  shall 
be  settled  on  the  Bill  of  Lading  net  weights  and  Cuban 
tests. 

IX 

Except  as  to  any  sugars  for  which  steamers  have  been 
named  for  loading,  this  contract  shajl  become  null  and 
void  in  the  event  that  the  existing  state  of  war  between 
the  United  States  and  Germany  shall  have  terminated 
and  the  fact  and  date  of  such  termination  shall  have 
been  ascertained  and  proclaimed  by  the  President  of  the 
United  States. 

However  and  whenever  this  contract  is  terminated  it  is 
agreed  that  The  Royal  Commission  on  The  Sugar  Supply 
shall  have  the  option  (declarable  within  10  days  from  such 
event)  of  carrying  out  in  whole  or  in  part  the  terms  of 
this  contract,  including  the  options  detailed  herein,  for 
that  portion  of  the  sugar  allocated  by  the  International 
Sugar  Committee  for  shipment  to  Europe,  and  similarly, 
each  refiner  in  the  United  States,  party  hereto,  severally, 
shall  have  the  option  (declarable  within  1 2  days  from  such 
event  and  assignable  in  whole  or  in  part  to  any  refiner 
party  hereto)  of  carrying  out  the  terms  of  this  contract, 
including  the  options  detailed  herein,  for  its,  or  his,  pro 
rata  portion,  as  set  forth  in  Exhibit  B  annexed  hereto,  in 
the  percentages  then  determined  thereunder,  as  well  as 
the  portion  of  any  other  party  hereto  who  does  not  exer- 
cise his  or  its  option  as  herein  provided. 

X 

All  matters  of  disagreement  arising  under  this  contract 
between  the  Buyer  and  the  Seller  which  cannot  be  ad- 


EXHIBIT   1  143 

justed  by  them  to  their  mutual  satisfaction,  shall  be  left 
to  arbitration  in  New  York.  Each  shall  select  one  arbi- 
trator, and  the  two  so  selected  shall  select  a  third,  and  the 
decision  of  any  two  of  said  arbitrators  shall  be  final  and 
conclusive  upon  the  parties  hereto.  Any  expenses  at- 
tached to  such  arbitration  shall  be  divided  equally  be- 
tween the  parties.  It  is  agreed,  however,  that  as  to 
disputes  arising  on  shipments  to  Europe  that  the  arbitra- 
tion clause  of  The  Royal  Commission  on  The  Sugar 
Supply  shall  apply. 

XI 

It  is  further  understood  that  the  individual  members 
of  the  said  International  Sugar  Committee  and  of  the 
Cuban  Committee  for  Arranging  Commercial  Terms  are 
acting  herein  as  volunteers,  in  a  purely  administrative 
capacity,  without  compensation,  and  accordingly  the 
Seller  and  the  other  parties  hereto  agree  that  said 
members  of  the  said  Committees  shall  not  incur  any 
personal  liability,  individually  or  collectively,  under  the 
terms  of  this  contract,  nor  be  responsible  for  any  damage 
of  whatever  kind  connected  with  any  matter  or  thing 
relating  to  this  contract ;  nor  shall  they  be  responsible  or 
liable  for  any  act,  fault  or  misconduct  of  any  agents  or 
persons  employed  by  said  International  Sugar  Com- 
mittee, and  the  Seller  and  the  other  parties  hereto  hereby 
further  release  and  discharge  the  said  individual  members 
of  the  said  Committees  from  any  and  all  claims  of  what- 
ever kind  for  personal  liability  or  responsibility  as 
aforesaid. 

XII 

The  Cuban  Commission  acting  under  the  express  au- 
thority of  the  Cuban  Government  will  promptly  notify 
the  President  of  the  Republic  of  Cuba  of  the  stipulations 
contained  in  this  contract  and  secure  such  governmental 
action  as  is  necessary  on  its  part  to  carry  out  its  terms. 


144  APPENDIX 

) 

XIII 

By  giving  five  days'  notice  in  writing  to  the  Buyer  and 
the  Seller  any  refiner,  party  hereto,  may  cease  refining 
operations  at  any  refinery  and  thereupon  shall  be  free  pro 
tanto  of  his  obligations  and  of  his  privileges  under  this 
agreement,  except  as  to  any  sugars  already  arranged  for 
his  account  and  to  arrive  within  thirty  days  from  the  date 
of  said  notice.  This  paragraph  shall  not  be  construed  to 
prevent  the  refining  of  domestic  sugar  contracted  for 
prior  to  date  hereof. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  sub- 
scribed this  agreement  as  of  the  day  and  year  first  above 
written. 

EXHIBIT   2 

UNITED  STATES  REFINERS'  RAW  SUGAR  CONTRACT 
TERMS,  CUBAS  — COST  AND  FREIGHT 


tons  of  2240  Ib.  each  of  Cuba  Centrifugal  Sugar. 
Delivery  of  five  per  cent  more  or  less  than  this 
amount  to  be  settled  for  at  the  market  price  of  like 
sugars  on  day  of  arrival. 

SHIPMENT  to  be  made 

DESTINATION  by  Steamer  (or  Steamers)  or  by  Car-ferry 
via  Key  West.  Steamers  to  be  named  as  soon  as 

possible  for 

but  at  all  events  two  days  before  steamer  finishes 
loading  at  the  last  loading  port.  The  buyer  can 
order  steamers  to  New  York,  Philadelphia,  Boston, 
Savannah,  New  Orleans,  Galveston,  only  one  port 
for  each  trip,  subject  to  supervision  by  United 
States  Governmental  shipping  agencies. 

AT  A  PRICE  of  4.985  cents  a  pound,  cost  and  freight,  New 
York  or/and  Philadelphia,  basis  96°  average  polar- 
ization, net  landed  weights,  based  on  a  freight  rate 
of  &£  cents  from  North  Side  Ports  west  of  and 


EXHIBIT  2  145 

including  Caibarien.  In  case  the  rate  of  freight  to 
Boston,  Savannah,  New  Orleans  or  Galveston  is 
lower/higher  than  the  rate  to  New  York  or/and 
Philadelphia  the  amount  of  the  reduction/increase 
from  same  point  of  shipment  shall  be  deducted/ 
added  to  the  above  price.  In  case  the  basis  of 
freight  rates  from  Havana,  Matanzas,  Cardenas, 
Sagua  and  Caibarien  to  New  York  or/and  Phila- 
delphia is  increased/decreased,  the  above  prices 
shall  be  increased/decreased  by  the  amount  of 
such  increase/decrease. 

DISCHARGE  of  the  sugar  in  the  United  States  to  be  made 
at  a  customary  safe  wharf  or  refinery,  as  directed 
by  the  buyer.  Demurrage  and  dispatch  money  at 
port  of  destination  to  be  for  account  of  buyer  and  at 
port  of  loading  to  be  for  account  of  seller.  Buyer 
not  to  be  responsible  for  demurrage  or  other  loss 
caused  by  reason  of  the  failure  of  seller  to  furnish 
all  necessary  Cuban  papers.  Documents  required 
to  effect  a  prompt  entry  and  discharge  of  cargo  in 
the  United  States  to  be  furnished  by  the  consignee. 
Party  in  default  in  producing  necessary  papers  for 
entry  of  sugar  shall  be  liable  for  demurrage  of  the 
vessel  and  for  actual  expense  incurred. 

PAYMENT  to by  cash  in  ten 

(10)  days  after  presentation  of  shipping  documents, 
or  by  ten  (10)  days'  sight  draft  drawn  on  refiner  to 
whom  the  cargo  may  be  apportioned,  for  95  per 
cent  of  the  invoice  amount  with  shipping  documents 
attached.  Any  balance  to  be  paid  after  final  settle- 
ment of  weights  and  tests,  and  interest  on  same  at 
rate  of  five  per  cent  to  begin  to  run  ten  days  from 
entry  of  steamer.  All  drafts  and  payments  to  be 
made  in  New  York. 

CANCELLATION  —  Should  any  unforeseen  circumstances 
such  as  war,  rebellion,  insurrection,  political  dis- 
turbances, strikes,  lack  of  fuel,  riots  or  civil  dis- 


146  APPENDIX 

turbance  in  the  Island  of  Cuba  prevent  the  making 
of  the  sugar  covered  by  this  agreement,  sellers  shall 
so  advise  buyer  immediately  and  be  released  from 
delivery  of  such  portion  of  the  crop  as  cannot  be 
made  or  delivered,  but  sellers  agree  to  use  due 
diligence  to  carry  out  this  contract  in  its  entirety 
notwithstanding  the  circumstances  mentioned. 

Should  unforeseen  circumstances,  such  as  war,  fire, 
explosion,  acts  of  God  and  the  public  enemy,  strikes, 
riots,  car  shortage,  lack  of  fuel  or  disturbances  in 
the  United  States  prevent  the  buyer  from  receiving, 
manufacturing  or  delivering  the  sugar  purchased 
under  this  agreement  he  shall  immediately  there- 
upon give  notice  of  such  conditions  to  the  seller  and 
the  buyer  shall  be  released  from  any  damages  by 
reason  of  non-acceptance  of-  raw  sugar  (except 
sugars  afloat  and  for  which  steamers  have  been 
declared)  during  the  time  that  the  above  conditions 
continue,  but  the  buyer  will  use  all  due  diligence 
notwithstanding  the  unforeseen  circumstances  to 
carry  out  this  contract  as  far  as  possible  in  its  en- 
tirety. 

SAMPLES  to  be  drawn  mutually  by  buyers  and  sellers. 
Three  tests  to  be  made  of  each  sample  of  sugar,  one 
by  seller's  chemist,  one  by  buyer's  chemist  and  one 
by  the  New  York  Sugar  Trade  Laboratory.  The 
average  of  the  two  nearest  polarizations  to  be  taken 
as  the  final  test.  Settlement  on  each  shipment  to  be 
made  on  the  final  test,  with  the  allowance  of  1/32^ 
per  pound  for  each  degree  above  the  selling  basis  up 
to  98°,  and  i/i6j£  per  pound  down  for  each  degree 
below  the  selling  basis  down  to  94°,  fractions  in  pro- 
portion. Any  marks  below  94°  test  3/3  2  £  per  pound 
per  degree  down. 

MARINE  AND  WAR  RISK  INSURANCE  to  be  covered  by 
buyer  from  shore  to  shore  including  risk  of  lighters 
at  ports  of  loading  and  discharge.  Any  extra  marine 


EXHIBIT  3  147 

insurance  in  addition  to  that  at  the  regular  rates 
shall  be  for  vessel's  or  sellers'  account,  to  be  de- 
termined in  advance,  but  in  no  instance  for  sellers' 
account  in  excess  of  one  half  of  i%.  The  buyer  is 
not  liable  for  any  excess  insurance  over  regular 
rates. 

EXHIBIT   3 

CONDITIONS   OF   THE    USUAL    CONTRACT  FORM  OF 
THE  ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY 

tons  (of  2240  Ib.  each)  of 

Cuba  Centrifugal  Sugar,  Fair  average  quality  of  the  Crop. 
For  Shipment 

Free  on  Board  Steamers  at 

one  or  two  customary  safe  Northside  Cuban  ports  for 
each  Cargo. 

Basis  96%  average  outturn  polarization.  For  any  ex- 
cess above  96%  1/32^  per  pound  per  degree  to  be  added 
to  Contract  price,  for  any  deficiency  below  96%,  1/16^ 
per  pound  per  degree  to  be  deducted  from  Contract  price 
down  to  94%  pol.  If  any  mark  or  marks  polarize  below 
94%  an  allowance  of  3/32^  per  pound  per  degree  to  be 
deducted  in  addition  to  the  aforementioned  allowance 
from  96%  to  94%,  but  no  Sugar  to  be  delivered  below 
93%- 
Fractions  in  all  cases  in  proportion. 

Net  landed  weights  &  outturn  polarization  at  port  of 
discharge  in  U.  K.,  U.  S.  or  France. 

Usual  conditions  of  sampling  and  polarizing. 

Sellers  have  the  option  of  delivering  at  one  or  two  cus- 
tomary safe  Southside  Cuban  ports.  Vessels  are  to 
receive  sugars  as  fast  as  possible  and  the  Sellers  are  to 
supply  the  cargoes  at  not  less  than  6000  bags  per  work- 
ing day  at  North  Side  ports  and  4500  bags  per  day  at 


148  APPENDIX 

South  Side  ports  in  default  of  which  demurrage  is  to  be 
paid  by  sellers  at  the  same  rate  as  heretofore. 

Sugar  to  be  shipped  in  Vessels  to  be  provided  by  Buyers 
to  load  as  above.  Buyers  to  giye  Sellers  reasonable 
notice  of  expected  readiness. 

Payment  to  be  made  by  Buyers  in  Cash  in  New  York  in 
exchange  for  complete  sets  of  Bills  of  Lading  and  Certifi- 
cates of  Origin  (old  and  new  forms)  immediately  upon 
receipt  of  a  cable  from  ,  to 

,  saying  that  the  Documents  are  in  their 
possession  in  New  York. 

Marine  insurance  from  shore  to  shore,  including  craft 
risk  loading  and  discharging,  on  usual  full  Lloyd's  Con- 
ditions to  be  for  Buyers'  account. 

War  risk,  if  any,  to  be  for  Buyers'  account. 

Any  dispute  arising  out  of  this  Contract  to  be  settled  by 
Arbitration  under  the  rules  of  the  Sugar  Association  of 
London  (Cane  Sugar  Section),  Buyers  being  considered 
as  a  Refiner. 

If  Sugar  Shipped  to  Europe,  Buyers  to  give  Sellers  at 
once  copies  of  such  Documents  as  are  required  by,  and 
on  forms  acceptable  to  the  Customs  at  port  of  Destina- 
tion, including  full  details  of  such  Consular  Certificates 
as  are  needful.  Sellers  to  have  shipping  documents  made 
on  similar  forms  as  soon  as  shipment  is  complete,  but 
they  are  not  to  be  held  responsible  for  any  delays  owing 
to  absence  of,  or  distant  locations  of  Consuls  from  port 
of  Shipment. 

In  the  event  of  Buyers  failing  to  provide  tonnage  as 
above  they  are  to  reimburse  Sellers  for  the  actual  cost  and 
proved  loss  of  holding  over  the  Sugar,  including  Interest 
@  5%  p.  a.  The  provisions  of  tonnage  not  to  be  unduly 
delayed. 


EXHIBIT  4  149 

EXHIBIT  4 

REFINERS'  AGREEMENT  WITH  UNITED   STATES 
FOOD   ADMINISTRATOR  OCTOBER   i,   1917 

This  Agreement,  entered  into  the  first  day  of  October, 
1917,  between  HERBERT  HOOVER,  as  United  States  Food 
Administrator,  acting  in  this  behalf  for  the  President 
of  the  United  States,  and 

hereinafter  called  the  Refiner,  WITNESSETH,  that 

WHEREAS,  pursuant  to  an  Act  of  Congress  entitled 
"An  Act  to  provide  for  the  national  security  and  defense 
by  encouraging  the  production,  conserving  the  supply 
and  controlling  the  distribution  of  food  products  and 
fuel,"  Approved  August  loth,  1917,  and  known  as  the 
Food  Control  Act,  the  President  of  the  United  States  has 
duly  appointed  Herbert  Hoover  Food  Administrator; 
and 

WHEREAS,  the  said  Food  Administrator  and  the  under- 
signed, pursuant  to  the  objects  and  purposes  of  the  said 
Act,  desire  to  secure  an  equitable  distribution  of  sugar 
throughout  the  United  States  during  the  period  of  the 
war,  and  to  prevent  unjust,  unreasonable,  unfair  and 
wasteful  commissions,  profits,  and  practices ;  and 

WHEREAS,  in  order  to  carry  out  the  purposes  of  the 
said  Act  and  the  objects  of  this  Agreement,  it  is  deemed 
advisable  that  the  United  States  Food  Administration, 
through  its  International  Sugar  Committee  hereinafter 
named,  should  co-operate  with  the  Royal  Commission  on 
the  Sugar  Supply  in  the  purchase  of  the  imported  raw 
sugar  requirements  of  the  United  States  of  America  and 
of  the  other  nations  at  war  with  Germany ;  and  in  the 
sale  of  United  States  refined  sugar  to  such  nations ;  and 

WHEREAS,  the  said  Food  Administrator,  to  effect  said 
co-operation  with  the  said  Royal  Commission  on  the 
Sugar  Supply,  has  appointed 

•   i 
S 


150  APPENDIX 

GEORGE  M.  ROLPH  of  Washington,  D.  C. 
EARL  D.  BABST  of  New  York  City 
WILLIAM  A.  JAMISON  of  New  York  City 
SIR  JOSEPH  WHITE-TODD  of  London,  England 
J.  RAMSEY  DRAKE  of  London,  England 
a  Committee  of  the  United  States  Food  Administration, 
to  be  called  the  INTERNATIONAL  SUGAR  COMMITTEE,  with 
headquarters  located  in  New  York  City,  to  arrange  sub- 
ject to  his  approval  for  the  purchase  and  shipment  of 
sugar  to  the  United  States  of  America  and  the  other 
nations  at  war  with  Germany,  and  with  the  duties  herein- 
after described ;  and 

WHEREAS,  the  said  Food  Administrator  has  appointed 
CLAUS  A.  SPRECKELS  of  New  York  City 
JAMES  H.  POST  of  New  York  City 
CHARLES  M.  WARNER  of  New  York  City 
GEORGE  H.  EARLE,  JR.,  of  Philadelphia,  Pennsylvania 
DWIGHT  P.  THOMAS  of  Boston,  Massachusetts 
a  Committee  of  the  United  States  Food  Administration, 
to  be  called  the  AMERICAN  REFINERS'  COMMITTEE,  to  per- 
form subject  to  his  approval  such  duties  as  are  herein- 
after specified,  and  has  appointed 

ROBERT  M.  PARKER  of  New  York  City 
W.  J.  McCAHAN,  JR.,  of  Philadelphia 
BENJAMIN  A.  OXNARD  of  Savannah,  Georgia 
M.  E.  GOETZINGER  of  New  York  City 
JOHN  FARR  of  New  York  City 
WILLIAM  HENDERSON  of  New  Orleans,  Louisiana 
W.  T.  ELDRIDGE  of  Sugar  Land,  Texas 
as  alternates  on  said  committee,  who  shall  have  the 
privilege  of  being  present  at  all  meetings  and  serving  in 
the  place  of  any  absent  member  or  filling  any  vacancies 
in  said  committee  in  the  order  named ;  and 

WHEREAS,  the  undersigned  is  a  buyer  of  raw  sugar 
and  is  desirous  of  aiding  and  promoting  the  efficient 
administration  of  said  Act  and  of  securing  the  purposes 
to  be  accomplished  thereby  by  voluntary  agreement 


EXHIBIT  4  151 

as  authorized  by  Section   2  of  the   aforesaid   Act   of 
Congress ; 

Now,  THEREFORE,  in  consideration  of  the  premises  and 
the  mutual  covenants  hereinafter  contained,  the  parties 
hereto  agree  as  follows : 

1.  The  United  States  Food  Administrator  agrees  that 
the  said  International  Sugar  Committee  shall  arrange  for 
the  purchase  of  raw  sugar  from  the  West  Indies  and  such 
other  import  sources  as  are  available,  for  the  purpose  of 
supplying   and   apportioning   the   requirements   of   the 
United  States  and  of  the  other  nations  at  war  with  Ger- 
many. 

2.  That  all  questions  of  a  purely  domestic  nature  com- 
ing before  the  International  Sugar  Committee  in  the  per- 
formance of  the  duties  assigned  to  it  by  this  contract  shall 
be  referred  to  the  American  members  of  said  committee 
for  action. 

3.  That  after  the  date  of  this  agreement  the  Refiner 
will  not  import  or  purchase  any  such  raw  sugar  as  is  de- 
scribed in  paragraph  one  (i),  except  through  the  Inter- 
national Sugar  Committee  of  the  United  States  Food 
Administration,  and  will  permit  said  Committee  to  ar- 
range, route  and  distribute  such  purchases  for  Refiner's 
account,  so  far  as  possible  according  to  Refiner's  conven- 
ience and  requirements.     Such  purchases  may  be  made 
either  direct  or  through  a  broker  if  customary,  or  other- 
wise as  said  International  Sugar  Committee  shall  find  ex- 
pedient. 

4.  That  the  United  States  Food  Administrator  will 
direct  the  said  American  Refiners'  Committee  to  fix  the 
basis  of  proportionate  distribution  of  the  sugar  provided 
by  the  International  Sugar  Committee  for  the  United 
States,  among  the  refiners  who  enter  into  this  or  a  similar 
agreement  with  him,  and  to  arrange  for  the  apportion- 
ment to  each  refiner  of  a  fair  proportion  of  such  sugar. 
In  case  of  disagreement  between  the  refiner  and  the 
American  Refiners'  Committee,  or  between  the  American 


152  APPENDIX 

Refiners'  Committee  and  the  International  Sugar  Com- 
mittee, the  matter  shall  be  submitted  to  the  United  States 
Food  Administrator  and  his  decision  shall  be  final. 

5.  That  in  apportioning  said  sugar  to  any  refiner,  as 
provided  in  Paragraph  4,  the  American  Refiners'  Com- 
mittee shall  take  into  consideration  any  written  contracts 
now  in  effect  made  by  the  refiner  for  the  purchase  of  for- 
eign or  domestic  raw  sugars  for  delivery  after  the  date  of 
this  agreement,  and  also  any  contracts  which  refiner  may 
hereafter  make  for  domestic  raw  sugars  which  are  not  im- 
ported into  the  United  States  or  any  purchases  of  same. 

6.  On  each  purchase  arranged  for  by  the  said  Interna- 
tional  Sugar   Committee   and   the  American   Refiners' 
Committee  the  buyer  will  pay  to  the  said  Committees  a 
sum  for  each  ton  that,  calculated  on  the  entire  tonnage 
handled  by  the  Committees,  will  be  sufficient  to  pay  the 
actual  expenses  of  the  Committees,  this  amount  to  be 
calculated  at  such  intervals  as  the  Committees  may  de- 
termine. 

7.  The  Food  Administrator  agrees  that  he  will  cause 
the  International  Sugar  Committee  to  determine  on  each 
business  day,  and  to  post  in  its  office  and  to  publish  in 
certain  daily  newspapers  and  trade  journals  to  be  desig- 
nated by  the  Committee,  basic  prices  for  96°  centrifugal 
sugar  delivered  duty  paid  refining  points. 

8.  The  Refiner  agrees  that  it  will  sell  all  sugar  refined 
by  it  at  a  price  not  more  than  one  and  three-tenths  cents 
net  per  pound  wholesale  of  refined  sugar  on  the  basis  of 
Fine  Granulated  Sugar  in  barrels  or  in  100  Ib.  bags  (when 
used  as  the  standard  basis)  f.  o.  b.  refinery,  above  the 
basic  price  for  96°  centrifugal  sugar  as  determined  by  the 
International  Sugar   Committee  under  Paragraph   (7) 
above  and  in  force  on  the  day  when  such  sale  of  refined 
sugar  is  made,  with  such  differentials  as  are  shown  on  its 
official  price  list.     Said  net  margin  shall  include  the  fee 
paid  to  the  Committee  and  be  exclusive  of  the  2%  cash 
discount,  payment  ten  days  to  the  trade.    This  margin 


EXHIBIT  4  153 

is  determined  on  a  delivered  duty  paid  price  of  from 
$\i  to  6£  per  pound,  and  in  case  the  basic  price  pro- 
vided for  in  Paragraph  (7)  goes  below  5!^  per  pound  shall 
be  decreased  by  the  United  States  Food  Administrator 
in  such  a  manner  as  to  return  substantially  the  same  profit 
to  the  refiner.  In  case  the  basic  price  goes  above  6£  per 
pound,  said  margin  shall  be  increased  by  the  United 
States  Food  Administrator  to  accomplish  the  same 
purpose. 

9.  It  is  mutually  agreed  that  said  margin  is  also  subject 
to  revision  from  time  to  tune  by  reason  of  changes  in 
costs  of  refining  and  of  distribution,  or  in  the  event  of 
an  excise  or  similar  tax. 

10.  It  is  further  understood  that  inasmuch  as  this 
agreement  has  been  entered  into  at  the  urgent  request  of 
the  Food  Administrator  for  the  purposes  above  recited 
and  notwithstanding  the  absence  of  any  statutory  power 
on  the  part  of  the  Food  Administrator  to  fix  the  price  of 
raw  or  refined  sugar  and  in  view  of  the  limitation  on  the 
price  to  be  secured  by  the  Refiner  for  its  refined  product 
herein  agreed  to,  the  said  Food  Administrator  through 
the  said  International  Sugar  Committee  and  the  Ameri- 
can Refiners'  Committee  will  co-operate  with  the  Re- 
finer to  prevent  so  far  as  possible  any  loss  by  the  said 
Refiner  on  any  sugar  purchased  as  herein  provided. 

11.  The  Refiner  agrees  to  conduct  its  cargo  export 
business  under  the  supervision  of  the  United  States  Food 
Administrator,  and  in  fixing  the  price  to  nations  repre- 
sented by  the  Royal  Commission  on  the  Sugar  Supply 
will  add  not  more  than,  the  net  refining  margin  for  domes- 
tic business,  with  drawback  allowance  to  the  buyer  of  one 
cent  per  pound  for  granulated  sugar  when  made  from 
dutiable  imported  Cuban  raw  sugar,  unless  otherwise  ap- 
proved by  the  United  States  Food  Administration,  such 
drawback  being  based  on  present  rate  of  duty  upon 
Cuban  sugars,  and  to  be  adjusted  in  the  event  of  any 
change  in  the  present  rate  of  duty  on  Cuban  sugar. 


154 


APPENDIX 


12.  It  is  understood  and  agreed  by  the  Refiner  that  a 
violation  of  any  of  the  terms  of  this  agreement  may  re- 
sult in  and  be  cause  for  revocation  of  its  license. 

13.  This  agreement  shall  remain  in  full  force  and 
effect  from  October  i,  1917,  until  the  existing  state  of 
war  between  the  United  States  and  Germany  shall  have 
terminated,  and  the  fact  and  date  of  such  termination 
shall  be  ascertained  and  proclaimed  by  the  President 
and  thereupon  this  Agreement  shall  end. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  sub- 
scribed this  agreement  on  the  day  and  year  first  above 
written. 


BASIS  OF  PROPORTIONATE  DISTRIBUTION  FIXED 
ON  OCTOBER  26,  1917,  BY  AMERICAN  REFINERS' 
COMMITTEE  OF  THE  UNITED  STATES  FOOD  AD- 
MINISTRATION 

RESOLVED,  That  the  proportionate  distribution  of 
sugar  provided  by  the  International  Sugar  Committee  for 
the  United  States,  from  and  after  October  ist,  1917,  is 
hereby  fixed  on  the  following  basis,  viz. : 

American  Sugar  Refining  Co.      .     .     .  40.650  per  cent. 

Arbuckle  Brothers 7.000 

California  &  Hawaiian 4.803 

Colonial  Sugars  Co 2.330 

Federal  Sugar  Refining  Co 9.605 

William  Henderson .960 

Imperial  Sugar  Refining  Co J-5I3 

W.  J.  McCahan 2.402 

National  Sugar  Refining  Co 12.007 

Pennsylvania  Sugar  Co 4.802 

Revere  Sugar  Refining  Co .960 

Savannah  Sugar  Refining  Co.      .     .     .  2.402 

Warner  Sugar  Refining  Co 7-204 

Western  Sugar  Refining  Co 3.362 

This  basis  to  be  subject  to  revision  whenever  the  Com- 
mittee finds  it  necessary ;   provided,  that  no  refiner  shall 


EXHIBIT  5  155 

be  allotted  less  than  two  hundred  tons  per  day  for  each 
day  his  refinery  shall  be  in  operation. 

M.  E.  GOETZINGER 

Secretary 

EXHIBIT  5 

AGREEMENT  WITH  BEET  SUGAR   PRODUCERS 
1917-1918  CROP 

AGREEMENT  WITH  UNITED   STATES   FOOD 
ADMINISTRATION 

This  Agreement  entered  into  this 

day  of  ,  1917,  between  the 

President  of  the  United  States  acting  by  and  through 
Herbert  Hoover,  United  States  Food  Administrator, 
and  of 

hereinafter  called  the  producer, 
Witnesseth,  That, 

WHEREAS,  The  United  States  Food  Administrator, 
pursuant  to  the  Act  of  Congress  approved  August  10, 
1917,  known  as  the  "Food  Control  Act,"  is  about  to  is- 
sue regulations  relating  to  the  conduct  of  the  business 
of  all  persons  importing,  manufacturing,  storing  or 
distributing  sugar,  and  desires  under  said  Act  to  secure 
an  equitable  distribution  of  the  sugar  crop  of  1917- 
1918  and  to  prevent  unjust,  unreasonable,  unfair  and 
wasteful  commissions,  profits  and  practices,  and 

WHEREAS,  The  United  States  Food  Administration 
has  urgently  requested  all  producers  of  beet  sugar  in  the 
United  States  to  enter  into  a  contract  with  him  and  for 
producers  who  enter  into  such  a  contract  has  determined 
a  maximum  price  of  $7.25  per  hundred  pounds,  cane 
basis,  seaboard  refining  points,  for  the  time  being,  and 

WHEREAS,  The  said  Food  Administrator  would  not 
under  the  terms  of  the  Food  Control  Act  and  under  a 


156  APPENDIX 

system  of  individual  licenses  authorized  by  said  Act,  or 
the  showing  now  made,  determine  a  higher  price  than 
$7.25  per  100  pounds,  cane  basis,  seaboard  refining 
points,  and 

WHEREAS,  The  President  of  the  United  States  act- 
ing by  and  through  the  Food  Administrator  has  ap- 
pointed a  committee  of  the  United  States  Food  Admin- 
istration to  be  called  the  Food  Administration  Sugar 
Distributing  Committee  to  carry  out  subject  to  his  ap- 
proval the  provisions  of  said  Act  so  far  as  they  relate 
to  the  distribution  of  beet  sugar,  which  Committee  is 
composed  of  the  following  persons,  to  wit : 

H.  A.  Douglas 

E.  C.  Howe 

W.  H.  Hannam 

S.  H.  Love 

W.  L.  Petrikin 

S.  W.  Sinsheimer 

W.  P.  Turner 

WHEREAS,  The  undersigned 

is  a  producer  of  beet  sugar  and  is  desirous  of  aiding  and 
promoting  the  efficient  administration  of  said  Act  and 
of  securing  the  purposes  to  be  accomplished  thereby  by 
agreement  as  authorized  by  Section  2  of  the  aforesaid 
Act  of  Congress : 

Now,  THEREFORE,  In  consideration  of  the  premises 
and  the  agreements  of  the  United  States  Food  Ad- 
ministrator hereafter  set  forth,  the  producer  hereby 
agrees : 

1.  That   in   selling   and   distributing   beet   sugar  it 
shall  observe,  respect  and  be  governed  by  any  and  all 
orders  and  regulations  which  said  United  States  Food 
Administrator,   through  the  Sugar  Distributing  Com- 
mittee, may  from  time  to  time  make  or  prescribe,  or 
any  general  orders  made  by  him,  which  are  applicable 
to  all  licenses  under  the  provisions  of  said  Act. 

2.  That  it  will  ship  sugar  only  at  such  times,  to  such 


EXHIBIT  5  157 

places  and  in  such  quantities  as  may  be  directed  by 
the  United  States  Food  Administrator  through  the 
Sugar  Distributing  Committee,  that  it  will  route  all 
sugars  as  directed  by  the  Sugar  Distributing  Commit- 
tee, that  it  will  promptly  comply  with  any  and  all  such 
directions,  and  with  all  orders  for  change  of  destina- 
tion and  route,  and  for  reconsignment,  and  that  it  will 
ship  all  sugar  sight  draft  attached  to  bill  of  lading  un- 
less otherwise  permitted  by  the  Sugar  Distributing 
Committee  at  the  request  of  the  producer;  in  case  of 
such  request  being  made  and  such  permission  being 
given,  should  any  loss  occur,  the  loss  shall  be  borne  by 
the  producer  making  such  request. 

3.  That  unless  a  special  allowance  is  made  by  the 
Sugar  Distributing  Committee  by  reason  of  deteriora- 
tion or  otherwise,  it  will  sell  all  sugar  at  the  market 
price  ruling  on  the  day  of  sale,  cane  basis,  less  any 
differential  which  may  be  established  by  the  Sugar 
Distributing  Committee  and  be  then  in  force,  between 
cane  sugar  and  beet  sugar;  in  no  case,  however,  to  ex- 
ceed the  maximum  price  of  seven  dollars  and  twenty- 
five  cents  ($7.25)  per  100  pounds,  cane  basis,  at  sea- 
board refining  points  less  said  differential  if  any,  unless 
increased  by  the  Food  Administrator  to  meet  price 
fixed  for  refined  cane  sugar  manufactured  from  foreign 
raw  sugar;  the  Sugar  Distributing  Committee  shall 
have  power  to  fix  a  differential  between  cane  sugar  and 
beet  sugar  at  its  discretion,  but  no  such  differential  need 
be  established  until  cane  sugar  becomes  a  close  competitor 
of  beet  sugar,  and  such  differential  shall  in  no  event 
exceed  20  cents  per  one  hundred  pounds.  Provided: 
That  should  any  excise  tax  on  sugar  be  levied  by  the 
United  States  Government,  the  maximum  price  of 
$7.25  per  one  hundred  pounds  shall  be  increased  by  the 
amount  of  said  excise  tax.  That  the  Sugar  Distribut- 
ing Committee  shall  determine  a  schedule  of  freight 
differentials  at  different  places,  based  on  freight  rates 


158  APPENDIX 

from  seaboard  refining  points;  and  a  regular  schedule 
of  package  differentials  for  package  goods,  and  such 
differentials  shall  be  observed  by  the  producer  in  com- 
plying with  the  terms  of  this  paragraph ;  that  the  Sugar 
Distributing  Committee  shall  issue  and  send  to  the  pro- 
ducer uniform  price  lists  showing  the  seaboard  base 
price,  the  differentials,  and  the  terms  upon  which  sugar 
may  be  sold ;  that  it  will  issue  a  new  price  list  whenever 
any  change  occurs  in  the  seaboard  base  price  or  in  the 
differential  or  terms,  and  that  no  sale  of  sugar  shall  be 
made  by  the  producer  except  at  the  price,  differentials 
and  terms  shown  herein,  until  the  Sugar  Distributing 
Committee  shall  have  issued  a  new  price  list  showing 
any  such  change  and  mailed  a  copy  of  same  to  the 
United  States  Food  Administrator;  but  this  clause 
shall  not  be  construed  to  authorize  the  Sugar  Distribut- 
ing Committee  to  name  any  higher  price  than  that 
hereinbefore  prescribed. 

4.  That  it  will  promptly  make  complete  and  true 
reports  to  the  Sugar  Distributing  Committee  of  all  sales 
of  sugar  made  by  it  at  such  intervals  and  in  such  forms 
as  may  be  required  by  said  Committee. 

5.  In    consideration    of    the    foregoing    agreements, 
the  United  States  Food  Administrator  agrees  that  he 
will  cause  the  Sugar  Distributing  Committee  to  direct 
distribution  of  the  beet  sugar  crop  herein  referred  to  in 
the  most  economical  and  efficient  method  consistent 
with  an  equitable  distribution;    that  at  such  intervals 
as  the  Sugar  Distributing  Committee  may  determine 
he  will  cause  to  be  calculated  by  said  Committee  the 
average  net  proceeds  per  pound  of  sugar  received  dur- 
ing a  definite  period  by  all  the  beet  sugar  producers 
who  shall  have  entered  into  a  similar  agreement  with 
him,  less  the  expense  per  pound  of  the  Sugar  Distrib- 
uting Committee  incurred  in  the  distribution  of  the 
beet  sugar  crop  as  herein  provided,  and  in  case  the 
average  net  proceeds  per  pound  for  sugar,  actually  re- 


EXHIBIT  5  159 

ceived  by  the  producer,  are  less  than  the  general  average 
net  proceeds  per  pound,  less  such  expense,  as  calculated 
by  the  Sugar  Distributing  Committee,  the  United  States 
Food  Administrator  promises  to  pay  to  the  producer 
the  difference  per  pound  therein,  multiplied  by  the 
number  of  pounds  sold  by  the  producer  during  such 
period,  and  the  final  calculation,  settlement  and  dis- 
tribution in  accordance  with  the  provisions  of  this  para- 
graph shall  be  made  as  soon  as  feasible,  but  not  later 
than  July  3ist,  1918. 

The  producer  agrees  that  if  the  net  proceeds  per  pound 
of  all  sugar  received  by  it  is  greater  than  the  general 
average  net  proceeds  per  pound  less  such  expense,  as 
calculated  by  the  Sugar  Distributing  Committee,  he  will 
pay  to  the  United  States  Food  Administration,  or  such 
person  as  it  may  direct,  the  difference  per  pound  therein, 
multiplied  by  the  number  of  pounds  sold  by  the  pro- 
ducer during  such  period.  In  cases  where  the  Com- 
mittee has  permitted  the  sale  of  sugar  at  less  than  market 
prices,  unless  such  decrease  hi  value  is  caused  by  some 
action  of  the  Committee,  the  difference  between  the 
price  actually  received,  and  the  market  price,  shall  be 
added  to  the  actual  net  proceeds  of  said  sugar  before 
averaging  the  net  proceeds  of  the  particular  producer 
or  of  all  producers ;  and  the  producer  thereof  shall  stand 
such  loss. 

6.  Nothing    in    this    agreement    shall   be    construed 
to  limit  the  power  of  the  President  or  of  the  United 
States  Food  Administrator  to  promulgate  regulations 
for  the  conduct  of  the  business  of  licensees  under  Sec- 
tion 5  of  the  Act  of  August  10,  1917,  known  as  "The 
Food  Control  Act." 

7.  Sugar   shall  be   delivered   to   the   United   States 
Government  for  Army  and  Navy  uses  when  and  in  such 
amounts  as  the  Government  may  require,  at  prices  to 
be  fixed  by  the  United  States  Food  Administrator,  and 
the  net  proceeds  of  such  sugar  shall  be  included  in 


160  APPENDIX 

calculating  the  general  average  net  proceeds  per  pound 
of  all  sugar  sold  by  producers  entering  into  this  agree- 
ment. 

8.  It  is  understood  and  agreed  by  the  producer  that 
a  violation  of  any  of  the  terms  of  this  agreement  may 
result  in  and  be  cause  for  revocation  of  its  license. 

9.  This  agreement  shall  remain  in  full  force  and  effect 
from  October  i,  1917,  until  the  entire  crop  of  1917- 
1918  shall  have  been  disposed  of  or  marketed. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  sub- 
scribed to  this  agreement  on  the  day  and  year  first  above 
written. 

EXHIBIT  6 

AGREEMENT  AS  TO  CUBAN  SUGARS  BETWEEN  THE 
UNITED  STATES  SUGAR  EQUALIZATION  BOARD, 
INC.  AND  A  COMMISSION  OF  THE  REPUBLIC  OF 
CUBA  AND  AGENTS  OF  CUBAN  PRODUCERS  1918- 
1919  CROP 

Agreement  entered  into  this  24th  day  of  October,  1918, 
in  the  City  and  State  of  New  York,  by  and  between 
UNITED  STATES  SUGAR  EQUALIZATION  BOARD,  INC., 
a  corporation  of  the  State  of  Delaware,  party  of  the 
first  part,  CARLOS  MANUEL  DE  CESPEDES,  ROBERT  B. 
HAWLEY,  and  MANUEL  RIONDA,  a  CUBAN  COMMISSION, 
parties  of  the  second  part,  and  AGENTS  OF  VARIOUS 
CUBAN  PRODUCERS  acting  severally  for  the  producers 
of  sugar  in  the  Island  of  Cuba,  parties  of  the  third  part, 

WITNESSETH  : 

WHEREAS,  the  United  States  Sugar  Equalization 
Board,  Inc.,  was  created  and  is  acting  as  an  agency  of 
the  United  States  for  the  purpose  in  part  of  equalizing 
the  distribution  and  selling  price  of  sugar,  and  to  that 
end  has  power  and  authority  to  purchase  domestic  or 
foreign  raw  sugar  in  such  quantities,  at  such  prices  and 
upon  such  terms  and  conditions  as  it  may  deem  advisable, 
and  to  resell  said  sugar  in  its  discretion  at,  below  or 


EXHIBIT  6  l6l 

above  cost  and  upon  the  same  or  other  and  additional 
terms  and  conditions ;  and 

WHEREAS,  the  President  of  the  Republic  of  Cuba 
by  Executive  order  has  appointed  Carlos  Manuel  de 
Cespedes,  Robert  B.  Hawley  and  Manuel  Rionda  a 
Cuban  Commission  to  arrange  for  the  sale  of  sugar  pro- 
duced in  the  Island  of  Cuba  during  the  crop  season 
1918-1919,  and  to  pledge  the  Republic  of  Cuba  to  the 
terms  and  conditions  provided  herein  to  be  performed  by 
said  Republic ;  and 

WHEREAS,  the  said  Cuban  Commission  has  repre- 
sented that  there  is  power  and  purpose  in  the  Govern- 
ment of  the  Republic  of  Cuba  to  co-operate  in  the  es- 
tablishment of  a  stabilized  price  for  the  whole  of  the 
Cuban  crop  of  1918-1919,  and  also  to  control  by  license 
the  export  of  any  Cuban  sugar  to  any  person,  entity  or 
country  under  specified  terms  and  conditions,  including 
price;  and 

WHEREAS,  the  said  United  States  Sugar  Equalization 
Board,  Inc.,  and  the  said  Cuban  Commission  have  ar- 
ranged for  the  purchase  and  sale  of  sugar  produced  in 
the  Island  of  Cuba  during  the  crop  season  1918-1919, 
upon  the  terms  and  conditions  hereinafter  stated ; 

Now,  THEREFORE,  the  parties  hereto  each  for  its  or 
himself  for  the  part  to  be  performed  by  it  or  him,  or  in 
behalf  of  others  herein  described,  agree  as  follows : 


The  said  Cuban  Commission  agrees  that  it  will  imme- 
diately arrange  that  each  and  every  producer  of  sugar  in 
the  Island  of  Cuba  shall  duly  authorize  an  agent  in  the 
City  of  New  York,  one  of  the  parties  hereto  (hereinafter 
severally  or  collectively  called  the  Seller),  to  contract  for 
and  sell  to  the  United  States  Sugar  Equalization  Board, 
Inc.  (hereinafter  called  the  Buyer)  the  whole  of  his  or 
their  output  of  sugar  deliverable  at  the  option  and  upon 


162  APPENDIX 

v 

the  direction  of  the  Buyer  for  shipment  to  the  United 
States,  United  Kingdom,  Canada,  France  or  Italy,  or 
to  any  other  country  upon  the  terms  and  conditions 
hereinafter  stated ;  said  authorizations  shall  be  in  writ- 
ing and  filed  with  the  Buyer  and  shall  state  the  name 
and  location  of  the  factory  or  factories  of  each  of  the  said 
producers  and  the  estimated  production  of  each  during 
the  crop  season  1918-1919. 

II 

Pursuant  to  the  said  authorizations  the  Seller  on 
behalf  of  himself  and  his  principals  agrees  to  sell  and 
to  deliver  to  the  Buyer  all  the  raw  sugar  produced  by 
him  or  his  principals  in  the  Island  of  Cuba  during  the 
crop  season  of  1918-1919  (except  that  actually  used  for 
local  consumption  in  Cuba)  and  the  Buyer  agrees  to 
purchase  and  receive  the  same,  on  the  following  terms  : 

For  shipment  to  the  United  States  at  the  price  of 
5.88  cents  *  per  pound  c.  &  f.  to  New  York/Philadelphia 
basis  96°  average  outturn  polarization,  net  landed 
weights,  based  on  a  freight  rate  of  383-  cents  per  100 
pounds  from  North  Side  Ports  west  of  and  including 
Caibarien,  subject  to  United  States  Raw  Sugar  contract 
terms,  a  copy  of  which  is  hereto  annexed  marked  Sched- 
ule A  and  made  a  part  hereof ; 

For  shipment  to  the  United  Kingdom,  France  and 
Italy  at  the  price  of  5.50  cents  per  pound  f .  o.  b.  Northern 
Ports,  or  5.45  cents  per  pound  f.  o.  b.  South  Side  Ports 
basis  for  96°  centrifugal  sugar,  subject  to  all  the  condi- 
tions of  the  usual  contract  form  for  shipment  to  these 

1  (NOTE.)  Inasmuch  as  the  Buyer  assumes  all  risk  of  insurance  up  to  an 
average  rate  of  3ic.  per  $100,  which  risk  includes  the  excess  insurance  of  7c. 
per  $100  paid  by  the  Seller  under  the  agreement  for  the  1917-1918  crop,  the 
basic  cost  and  freight  price  is  made  5.88c.  per  pound  for  shipments  to  the  United 
States  in  place  of  s.88sc.  per  pound.  The  difference  of  .005  is  to  compensate 
the  Buyer  for  the  excess  insurance  paid  by  the  Seller  under  the  agreement  for 
the  1917-1918  crop  and  to  provide  for  the  contingency  of  advancing  rates  under 
the  Buyer's  average  rate  policy  up  to  an  average  of  310.  per  $100. 


EXHIBIT   6  163 

countries,  a  copy  of  which  is  hereto  annexed  marked 
Schedule  B  and  made  a  part  hereof ; 

For  shipment  to  Canada,  if  shipped  direct  to  a  Cana- 
dian port,  at  the  same  prices  and  upon  the  same  terms  as 
are  provided  for  shipments  to  the  United  Kingdom,  ex- 
cept that  all  matters  of  disagreement  shall  be  determined 
pursuant  to  the  provisions  of  Article  VI  hereof,  but  if 
shipped  via  a  United  States  port,  at  the  same  prices  and 
upon  the  same  terms  as  are  provided  for  shipments  to  the 
United  States. 

For  shipment  to  all  countries  other  than  the  United 
States,  the  United  Kingdom,  Canada,  France  and  Italy, 
at  the  same  prices  and  upon  the  same  terms  as  are  pro- 
vided for  shipments  to  the  United  Kingdom,  except,  how- 
ever, that  net  shipping  weights,  less  i%,  and  Cuban  tests 
shall  be  accepted  by  the  Buyer  and  the  Seller  (weight  to 
be  calculated  on  U.  S.  standard),  and  that  payment  for 
such  sugar  shall  be  made  by  the  Buyer  in  cash  in  New 
York  in  ten  days  after  presentation  of  shipping  docu- 
ments, or,  at  Seller's  option,  by  ten  days  sight  draft 
drawn  on  Buyer  with  shipping  documents  attached,  and 
except  that  ah*  matters  of  disagreement  shall  be  deter- 
mined pursuant  to  the  provisions  of  Article  VI  hereof. 

Shipments  are  to  be  made  as  soon  as  possible  after 
grinding  commences  and  not  less  than  2  per  cent  of  the 
amount  shall  be  shipped  during  December,  1918;  the 
balance  in  approximate  equal  monthly  shipments  from 
January  to  November,  1919,  both  inclusive. 

Sugar  shall  be  shipped  in  sound  jute  bags  containing 
approximately  325  Ib.  each.  In  all  cases  where  ship- 
ment is  made  in  second  hand  bags  there  shall  be  deducted 
not  less  than  15  cents  for  each  second  hand  bag. 

The  Buyer  reserves  the  right  to  order  larger  quantities 
shipped  in  any  month  if  tonnage  is  obtainable  and  sugar 
is  produced  and  available. 

The  Buyer  will  notify  the  Seller  from  time  to  time  of 
proposed  allocations  of  sugar  for  shipment  as  between 


164  APPENDIX 

the  United  States  and  other  countries,  and  shipments 
shall  be  made  as  directed. 

The  Seller  undertakes  to  pay  all  lighterage  charges 
and  all  shipping  expenses,  and  also  all  Cuban  taxes  both 
domestic  and  export. 

On  all  shipments  on  the  c.  &  f.  basis  provided  in 
Schedule  A,  the  Seller  undertakes  to  pay  all  necessary 
expenses  at  the  port  of  discharge  to  effect  delivery  to 
Buyer  on  such  safe  wharf  or  refinery  dock  as  may  be 
designated  by  Buyer. 

The  Seller  agrees  to  pay  to  the  Buyer  a  commission 
of  one-half  of  one  per  cent  on  the  sugar  shipped  to  other 
than  United  States  ports. 

The  Seller  agrees  to  pay  on  the  sugar  shipped  to  United 
States  ports,  a  brokerage  to  be  calculated  on  the  aver- 
age tons  of  Cuban  sugar  handled  by  brokers  in  the  United 
States  heretofore  acting  in  their  legitimate  capacity  as 
brokers  in  the  three  year  period  of  1915-16-17,  but  the 
total  disbursement  for  this  purpose  shall  not  exceed 
$350,000.  The  concurrent  decision  of  the  Buyer  and  the 
Cuban  Commission  shall  be  final  and  conclusive  on  any 
question  or  dispute  arising  under  this  clause. 

In  the  event  of  any  steamer  being  lost  its  cargo  shall 
be  settled  on  the  Bill  of  Lading  net  weights  and  Cuban 
tests  as  soon  as  possible  but  not  later  than  30  days  after 
proof  of  loss. 

The  parties  obligated  to  provide  tonnage  will  use  due 
diligence  and  every  effort  so  to  do,  but  are  released  from 
responsibility  by  acts  or  circumstances  beyond  their  con- 
trol. 

Marine  Insurance  to  be  covered  by  the  Buyer  from 
shore  to  shore  including  the  risk  of  lighterage  to  and  from 
the  vessel  at  ports  of  loading  and  discharge.  Sugar  shall 
not  be  loaded  on  any  steamer,  nor  other  vessel  not  accept- 
able to  the  insurers  under  Buyers'  average  rate  policy, 
unless  specific  directions  to  load  an  unacceptable  vessel 
are  given  by  either  the  Buyer  or  the  Seller  and  insurance 


EXHIBIT  6  165 

satisfactory  to  the  Buyer  is  obtained.  When  such 
specific  directions  are  given,  the  excess  insurance  over 
an  average  rate  of  31  £  per  $100  shall  be  paid  by  the 
party  ordering  the  vessel  loaded.  All  war  risk,  from 
shore  to  shore,  is  for  account  of  Buyer. 

Ill 

The  Buyer  shall  have  the  right  from  time  to  time  to 
assign  this  contract,  without  recourse,  in  respect  to  any 
part  of  the  sugar  contracted  for  herein,  to  the  Govern- 
ments of  the  United  Kingdom,  Canada,  France  or  Italy, 
or  to  any  duly  constituted  agency  representing  all  or 
either  of  said  governments,  or  to  any  sugar  refiner  of  the 
United  States.  The  Buyer,  upon  making  any  such 
assignment,  shall  give  notice  thereof  to  the  Seller. 

IV 

The  purchase  of  the  sugar  crop  of  1918-1919  by  the 
Buyer  as  herein  provided  is  made  in  reliance  upon  the 
representation  and  agreement  of  the  Cuban  Govern- 
ment that  it  will  effectually  prohibit  any  sugars  of  the 
1918-1919  crop  from  being  shipped  or  exported  from 
the  Island  of  Cuba  except  under  this  contract,  and  that 
it  will  enact  such  laws  and  promulgate  such  orders  and 
decrees  as  are  necessary  to  faithfully  fulfill  and  observe 
the  stipulation  and  condition  aforesaid. 

In  the  event  of  failure  on  the  part  of  the  Cuban 
Government  to  take  the  action  above  provided,  or  to 
faithfully  fulfill  and  observe  said  stipulation  and  condi- 
tion, or  in  the  event  of  the  inoperation,  rescission  or  sus- 
pension thereof,  the  Buyer  shall  have  the  option,  upon 
notice  in  writing  to  the  Seller,  to  cancel  this  contract  in 
respect  to  any  undelivered  portion  of  the  said  sugar  crop 
of  1918-1919. 

If  the  Seller  fails  to  deliver  the  sugar  required  to  be 
delivered  to  the  Buyer  under  this  contract  or  if  any  sugar 


1 66  APPENDIX 

is  directly  or  indirectly  shipped  or  exported  from  the 
Island  of  Cuba  by  the  Seller  or  his  principal  to  any 
consignee  other  than  the  Buyer  or  its  assigns,  the  Buyer 
shall  have  the  right,  either  in  law  or  in  equity,  to  sue  for 
and  recover  all  damages  resulting  therefrom,  whether 
or  not  the  above  option  of  cancellation  is  exercised. 

V 

This  contract  is  also  made  in  reliance  upon  the  repre- 
sentation and  agreement  of  the  Cuban  Government  that 
it  will  place  no  restrictions  or  embargoes  on  the  export 
of  molasses  to  the  United  States. 


VI 

All  matters  of  disagreement  arising  under  this  con- 
tract between  the  Buyer  and  the  Seller  which  cannot  be 
adjusted  by  them  to  their  mutual  satisfaction,  shall  be 
left  to  arbitration  in  Washington.  But  before  any  ar- 
bitration can  be  called  by  the  Seller  the  matter  in  dis- 
pute shall  be  submitted  by  it  or  him  to  the  Cuban  Com- 
mission and  its  approval  of  and  consent  to  the  arbitration 
obtained  in  writing.  For  the  purposes  of  the  arbitration, 
the  Buyer  and  the  Seller  shall  each  select  one  arbitrator, 
and  the  two  so  selected  shall  select  a  third,  and  the  de- 
cision of  any  two  of  said  arbitrators  shall  be  final  and 
conclusive  upon  the  parties  thereto.  Any  expenses  at- 
tached to  such  arbitration  shall  be  divided  equally  be- 
tween said  parties.  It  is  agreed,  however,  that  as  to 
disputes  arising  on  shipments  to  the  United  Kingdom, 
France  or  Italy  the  arbitration  clause  in  Schedule  B 
shall  apply. 

VII 

The  Cuban  Commission  is  acting  hereunder  solely 
in  a  representative  capacity  as  an  administrative  agency 


EXHIBIT   6  167 

of  the  Cuban  Government  under  the  express  authority 
of  said  Government  and  its  members  do  not  assume  nor 
shall  they  be  charged  with  any  personal  liability.  Upon 
the  execution  of  this  contract  the  Cuban  Government 
will  promptly  take  such  governmental  action  as  is 
necessary  on  its  part  to  carry  out  its  terms.  It  is 
understood  and  agreed  by  the  parties  hereto  that  the 
obligations  of  the  Buyer  hereunder  are  conditioned 
upon  the  undertakings  of  the  Cuban  Government  here- 
in expressed  and  upon  the  faithful  fulfillment  and  obser- 
vance thereof. 

It  is  also  agreed  that  the  stockholders,  directors  and 
officers  of  the  United  States  Sugar  Equalization  Board, 
Inc.,  do  not  assume  nor  shall  they  or  either  of  them  be 
charged  with  any  personal  liability  under  this  contract 
or  in  respect  to  any  matter  or  thing  arising  therefrom. 

VIII 

It  is  contemplated  by  the  Buyer  and  Seller  that  the 
greater  part  of  the  sugar  delivered  for  shipment  to  the 
United  States  will  be  resold  directly  or  indirectly  to  the 
Atlantic  and  Gulf  sugar  refiners  of  the  United  States, 
who  will  be  made  the  consignee  of  such  sugar.  For 
the  convenience  of  the  parties  in  all  such  cases,  it  is 
agreed  that  before  departure  of  vessel  from  loading  port 
the  Seller,  upon  the  request  of  the  Buyer,  will  execute 
with  the  consignee  a  confirmation  in  the  form  of  Schedule 
A  hereto  annexed,  and  will  settle  with  such  consignee  in 
accordance  with  this  contract,  and  it  is  further  agreed 
that  the  Buyer  will  guarantee  performance  by  the  con- 
signee unless  the  sugar  is  assigned  pursuant  to  Article 
III  hereof.  All  such  consignments  shall  be  by  negotiable 
Bill  of  Lading  to  Seller's  order  duly  endorsed  and  said 
Bill  of  Lading  shall  not  be  delivered  to  consignee  until 
payment  for  95%  of  the  invoice  is  made  as  provided  in 
said  Schedule  A. 


l68  APPENDIX 

rx 

It  is  agreed  that  the  Seller  or  his  principals  shall  not 
export  from  the  Island  of  Cuba  during  the  term  of  this 
contract  any  edible  syrups  fit  for  human  consumption 
from  which  sugar  may  be  commercially  extracted  with- 
out the  consent  of  the  Buyer. 

X 

Should  any  unforeseen  circumstances  such  as  war,  re- 
bellion, insurrection,  political  disturbances,  strikes,  lack 
of  fuel,  riots  or  civil  disturbance  in  the  Island  of  Cuba 
prevent  the  making  of  the  sugar  covered  by  this  con- 
tract, the  Seller  shall  so  advise  the  Buyer  immediately 
and  thereupon  shall  be  released  from  delivery  of  such 
portion  of  the  crop  as  cannot  be  made  or  delivered,  but 
the  Seller  agrees  to  use  due  diligence  to  carry  out  this 
contract  in  its  entirety  notwithstanding  the  circum- 
stances mentioned. 

Should  any  unforeseen  circumstances,  such  as  war,  fire, 
explosion,  acts  of  God  and  the  public  enemy,  strikes, 
riots,  car  shortage,  lack  of  fuel,  lack  of  storage  facilities 
or  disturbances  in  the  United  States  prevent  the  Buyer 
from  receiving,  or  delivering  or  the  refiners  of  the  United 
States  from  refining  the  sugar  purchased  under  this  con- 
tract the  Buyer  shall  immediately  give  notice  of  such 
conditions  to  the  Seller  and  thereupon  the  Buyer  shall 
be  released  from  any  damages  by  reason  of  non-accept- 
ance of  raw  sugar  (except  sugars  afloat)  during  the  time 
that  the  above  conditions  continue,  but  the  Buyer  will 
use  all  due  diligence  notwithstanding  the  unforeseen  cir- 
cumstances to  carry  out  this  contract  as  far  as  possible 
in  its  entirety. 

IN  WITNESS  WHEREOF,  the  parties  hereto,  being  duly 
authorized,  have  executed  this  agreement  as  of  the  day 
and  year  first  above  written. 


EXHIBIT   6  169 

SCHEDULE  A 

CONFIRMATION 

U.  S.  RAW  SUGAR  CONTRACT 

CUBAS  —  COST  AND  FREIGHT 

New  York, ,  191 .  . 

TO REFINING  CO.      hereinafter 

called  "  Consignee  " 

At  the  request  of  the  United  States  Sugar  Equalization 
Board,  Inc.,  we  hereby  confirm  the  sale  to  you  for  its 
account  under  the  terms  of  the  Agreement  as  to 
Cuban  Sugars,  1918-1919  crop,  dated  October  24th, 

1918,  of  about long  tons 

of  Cuba  Centrifugal  Sugar.  Delivery  of  five  per 
cent  more  or  less  than  this  amount  to  be  settled  for 
on  same  basis. 

SHIPMENT  to  be  made  by  negotiable  bill  of  lading  per  s/s 

expected  to 

load  at about 

191 .  .  for  port  of 

via  Steamer  (or  Steamers) 

or  by  Car-Ferry  via  Key  West.  The  Consignee  must 
give  notice  of  destination  at  least  two  days  before 
steamer  finishes  loading  at  the  last  loading  port. 
The  Consignee  can  order  steamers  to  New  York, 
Philadelphia,  Boston,  Savannah,  New  Orleans  or 
Galveston,  but  to  only  one  port  for  each  trip. 

Ax  A  PRICE  OF  5.88  cents  a  pound,  cost  and  freight,  basis 
96°  average  outturn  polarization,  net  landed  weights, 
and  is  based  on  a  freight  rate  of  38^  cents  from  North 
Side  Ports  west  of  and  including  Caibarien  to  New 
York  or/and  Philadelphia.  In  case  the  rate  of 
freight  to  Boston,  Savannah,  New  Orleans  or 
Galveston  is  lower/higher  than  the  rate  to  New 
York  or/and  Philadelphia  from  said  North  Side 
Ports,  the  amount  of  the  reduction/increase  shall 


APPENDIX 

be  deducted  from/added  to  the  above  price.  In 
case  the  rate  of  freight  from  said  North  Side  Ports 
to  New  York  or/ and  Philadelphia  is  increased/de- 
creased, the  above  price  -shall  be  increased/de- 
creased by  the  amount  of  such  increase/decrease. 

DISCHARGE  of  the  sugar  in  the  United  States  to  be  made 
at  a  customary  safe  wharf  or  refinery,  as  directed  by 
the  Consignee.  Demurrage  and  dispatch  money  at 
port  of  destination  to  be  for  account  of  Consignee 
and  at  port  of  loading  to  be  for  account  of  Seller. 
Consignee  not  to  be  responsible  for  demurrage  or 
other  loss  caused  by  reason  of  the  failure  of  Seller 
to  furnish  all  necessary  Cuban  papers.  Documents 
required  to  effect  a  prompt  entry  and  discharge  of 
cargo  in  the  United  States  to  be  furnished  by  the 
Seller.  Party  in  default  in  producing  necessary 
papers  for  entry  of  sugar  shall  be  liable  for  demur- 
rage of  the  vessel  and  for  actual  expense  incurred. 

PAYMENT  to  be  made  by  the  Consignee  to 

either  in  cash  on  presenta- 
tion of  all  necessary  shipping  documents  or  at 
Buyer's  option  by  one  day  sight  draft  attached  to 
negotiable  bill  of  lading  to  Seller's  order,  duly  en- 
dorsed, for  95%  of  the  invoice,  based  on  net  shipping 
weights  and  tests,  less  interest  for  nine  days  at  the 
rate  of  6%  per  annum.  Any  balance  to  be  paid  im- 
mediately after  final  settlement  of  weights  and  tests, 
with  interest  on  balance  at  the  rate  of  6%  per  annum 
from  ten  days  after  date  of  entry  of  steamer.  If 
sugar  is  shipped  in  sailing  vessel  payment  to  be  made 
in  cash  on  presentation  of  documents  after  entry  of 
vessel  at  Customs  House,  for  95%  of  the  invoice 
based  on  net  shipping  weights  and  tests,  any  balance 
to  be  paid  immediately  after  final  settlement  of 
weights  and  tests  with  interest  on  said  balance  as 
above.  All  payments  to  be  made  in  New  York  or 
New  York  Exchange. 


EXHIBIT  6  171 

SAMPLES  to  be  drawn  mutually  by  Consignee  and  Seller. 
Three  tests  to  be  made  of  each  sample  of  sugar,  one 
by  Seller's  public  chemist,  one  by  Consignee's  public 
chemist  and  one  by  the  New  York  Sugar  Trade 
Laboratory.  The  average  of  the  two  nearest  polari- 
zations to  be  taken  as  the  final  test.  Settlement  on 
each  shipment  to  be  made  on  the  final  test,  with  the 
allowance  of  1/20^  per  pound  for  each  degree  above 
the  selling  basis  up  to  98°,  and  i/io^  per  pound  for 
each  degree  below  the  selling  basis  down  to  94°, 
fractions  in  proportion.  Any  marks  below  94°  test 
3/20^  per  pound  per  degree  down,  fractions  in  pro- 
portion, but  no  sugar  to  be  delivered  below  93°, 
unless  on  discount  terms  mutually  satisfactory  to 
Consignee  and  Seller. 

MARINE  AND  WAR  RISK  INSURANCE  arranged  by  United 
States  Sugar  Equalization  Board,  Inc. 

SCHEDULE   B 

CONDITIONS  OF  THE  USUAL  CONTRACT  FORM  FOR 
SHIPMENT  TO  THE  UNITED  KINGDOM,  FRANCE 
AND  ITALY 

tons  (of  2,240  Ibs.  net  each)  of 

Cuba  Centrifugal  Sugar,  Fair  average  quality  of  the 
Crop. 
For  Shipment. 

Free  on  Board  Steamers  at 

» 

one  or  two  customary  safe  Northside  Cuban  ports  for 

each  Cargo. 

Basis  96%  average  outturn  polarization.  For  any  ex- 
cess above  96%  1/20^  per  Ib.  per  degree  to  be  added 
to  Contract  price ;  for  any  deficiency  below  96%, 
i/io£  per  Ib.  per  degree  to  be  deducted  from 
Contract  price  down  to  94%  pol.  If  any  mark  or 
marks  polarize  below  94%  an  allowance  of  3/20^ 


172  APPENDIX 

per  Ib.  per  degree  to  be  deducted  in  addition  to 
the  aforementioned  allowance  from  96%  to  94%, 
but  no  Sugar  to  be  delivered  below  93%. 

Fractions  in  all  cases  in  proportion. 

Net  landed  weights  &  outturn  polarization  at  port  of 
discharge. 

Usual  conditions  of  sampling  and  polarizing. 

Sellers  have  the  option  of  delivering  at  one  or  two 
customary  safe  South  Side  Cuban  ports.  Vessels  are  to 
receive  sugars  as  fast  as  possible  and  the  Sellers  are  to 
supply  the  cargoes  at  not  less  than  6,000  bags  per  work- 
ing day  at  North  Side  ports  and  at  Cienfuegos  and  4,500 
bags  per  day  at  all  other  South  Side  ports  in  default  of 
which  demurrage  is  to  be  paid  by  sellers  at  the  same  rate 
as  heretofore. 

Sugar  to  be  shipped  in  Vessels  to  be  provided  by 
Buyers  to  load  as  above.  Buyers  to  give  Sellers  reason- 
able notice  of  expected  readiness. 

Payment  to  be  made  by  Buyers  in  Cash  in  New  York 
in  exchange  for  complete  sets  of  Bills  of  Lading  and  Cer- 
tificates of  Origin  (old  and  new  forms)  immediately  upon 
receipt  of  a  cable  from  ,  to 

,  saying  that  the  Documents 
are  in  their  possession  in  New  York. 

Marine  Insurance  from  shore  to  shore,  including  craft 
risk  loading  and  discharging,  on  usual  full  Lloyd's  Con- 
ditions to  be  for  Buyers'  account. 

War  risk,  if  any,  to  be  for  Buyers'  account. 

Any  dispute  arising  out  of  this  Contract  to  be  settled 
by  Arbitration  under  the  rules  of  the  Sugar  Association 
of  London  (Cane  Sugar  Section),  Buyers  being  con- 
sidered as  a  Refiner. 

If  Sugar  Shipped  to  Europe,  Buyers  to  give  Sellers  at 
once  copies  of  such  Documents  as  are  required  by,  and  on 
forms  acceptable  to  the  Customs  at  port  of  Destination, 
including  full  details  of  such  Consular  Certificates  as  are 
needful.  Sellers  to  have  shipping  documents  made  on 


EXHIBIT  7  173 

similar  forms  as  soon  as  shipment  is  complete,  but  they 
are  not  to  be  held  responsible  for  any  delays  owing  to 
absence  of,  or  distant  locations  of  Consuls  from  port  of 
Shipment. 

In  the  event  of  Buyers  failing  to  provide  tonnage  as 
above  they  are  to  reimburse  Sellers  for  the  actual  cost  and 
proved  loss  of  holding  over  the  Sugar,  including  Interest 
@  5%  p.  a.  The  provisions  of  tonnage  not  to  be  un- 
duly delayed. 

EXHIBIT  7 

AUTHORIZATION  TO   SELL  UNDER  AGREEMENT  AS 
TO  CUBAN  SUGARS 

CROP  OF  1918-1919 

CUBA,  OCTOBER  24th,  1918. 


New  York,  U.  S.  A. 
DEAR  SIR  : 

By  these  presents  we  authorize  you  to  sell  to  the 
United  States  Sugar  Equalization  Board,  Inc.,  under  the 
Agreement  as  to  Cuban  Sugars,  Crop  of  1918-1919, 
dated  the  24th  day  of  October,  1918,  by  and  between 
the  United  States  Sugar  Equalization  Board,  Inc.,  the 
Cuban  Commission  and  various  sellers  of  Cuban  sugar, 
all  parties  signatory  thereto,  a  copy  of  which  Agreement 
we  have  read  and  now  hold,  all  sugar  to  be  produced  by 
us,  or  by  plantations  we  represent,  during  the  crop  year 
1918-1919,  except  that  actually  sold  for  local  consump- 
tion in  Cuba. 

We  attach  hereto  a  list  of  our  plantations  participat- 
ing in  said  Agreement  and  a  conservative  estimate  of  the 
amount  of  sugar  that  will  be  produced  by  each  during  the 
crop  year  1918-1919,  in  tons  of  2240  pounds  each,  also 
statement  showing  actual  outturn  of  the  same  planta- 
tions for  crop  of  1917-1918. 


174  APPENDIX 

These  presents  will  serve  as  your  authorization  to  sign 
the  said  Agreement  for  and  in  behalf  of  ourselves  and  the 
plantations  enumerated  herein. 

We  authorize  and  direct  you  to  pay  to  the  Buyer  -5  of 
i  %  commission  on  all  sugar  produced  on  our  plantations 
and  shipped  to  other  than  United  States  ports. 

We  also  authorize  and  direct  you  to  pay  to  the  Cuban 
Adjustment  Committee  hereinafter  named  i  of  i%  on 
all  sugars  shipped  to  United  States  ports,  and  said 
Adjustment  Committee  is  authorized  and  directed  to 
pay  to  each  of  the  brokers  in  the  United  States  who 
received  brokerage  on  the  sugar  shipped  to  the  United 
States  of  the  1917-1918  crop,  the  same  amount  as  was 
allotted  to  them  on  that  crop  by  the  Committee  on 
brokerage  appointed  for  that  purpose,  and  said  Adjust- 
ment Committee  is  authorized  to  use  for  its  purposes  here- 
inafter stated  any  balance  that  may  remain  in  its  hands. 

We  also  consent  and  agree  to  the  appointment  by  the 
United  States  Sugar  Equalization  Board,  Inc.,  of  a  Com- 
mittee to  be  known  as  the  Cuban  Allotment  Committee, 
with  headquarters  in  New  York,  to  consist  of  the  follow- 
ing members : 

MR.  B.  BRAGA  RIONDA 
MR.  T.  A.  HOWELL 
MR.  W.  M.  CARSON 
MR.  F.  DE  ZALDO 
MR.  JOHN  GILMOUR 

The  duties  of  this  Committee  will  be  to  handle,  super- 
vise and  direct  the  details  of  carrying  out  the  allocations 
of  sugar  and  its  shipment  from  Cuba,  as  may  be  necessary 
in  the  interests  of  the  respective  parties,  and  we  agree 
to  carry  out  its  directions.  The  membership  of  said 
Committee  may  be  changed  from  time  to  time  by  the 
United  States  Sugar  Equalization  Board,  Inc. 

We  also  consent  and  agree  to  the  appointment  by 
the  Cuban  Commission  appointed  by  President  Meno- 
cal,  the  personnel  of  which  is  as  follows : 


EXHIBIT  7  175 

HON.  CARLOS  MANUEL  DE  CESPEDES 
MR.  ROBERT  B.  HAWLEY 
MR.  MANUEL  RIONDA 

of  a  Committee  to  be  known  as  the  Cuban  Adjustment 
Committee  to  handle  all  matters  (not  involving  sugar 
allocations)  such  as  financial  adjustments,  problems  in- 
volved in  "shorts  and  overs"  in  cargoes,  insurance 
matters,  demurrage  and  dispatch,  and  all  other  adjust- 
ments that  might  be  necessary  hi  the  interest  of  all 
parties  to  the  Agreement  as  to  Cuban  Sugars,  Crop  of 
1918-1919,  or  in  connection  with  the  Charter  Party 
under  which  the  sugar  will  be  transported,  or  in  con- 
nection with  the  payment  and  settlement  of  all  broker- 
age matters  arising  out  of  deliveries  to  the  United  States 
or  Canada,  and  we  agree  to  abide  by  the  decision  and 
action  of  said  Committee  in  all  such  matters ;  said  Com- 
mittee to  consist  of  the  following  five  members,  or  as 
the  same  may  be  changed  from  time  to  time  by  the 
Cuban  Commission : 

MR.  JAMES  H.  POST 

MR.  MANUEL  E.  RIONDA 

MR.  EDW.  S.  MCMANUS 

MR.  JAS.  S.  CONNELL 

MR.  WM.  W.  GARDINER 

In  order  to  defray  the  expenses  of  the  Cuban  Adjust- 
ment Committee  and  any  legitimate  adjustments  that 
might  be  necessary  in  carrying  out  the  Agreement  as 
to  Cuban  Sugars,  Crop  of  1918-1919,  we  hereby  author- 
ize you  to  pay  to  the  Cuban  Adjustment  Committee 
20  per  bag  on  each  bag  of  sugar  shipped  by  us  and  sold 
under  said  Agreement.  It  is  understood,  however,  that 
the  Cuban  Adjustment  Committee  shall  at  stated  periods 
render  an  accounting  to  the  Cuban  Commission  of  its 
receipts  and  disbursements  and  any  balance  remain- 
ing in  the  hands  of  the  Cuban  Adjustment  Committee 
on  the  termination  of  said  Agreement  shall  be  disposed 
of  as  the  Cuban  Commission,  for  and  in  the  name  of  the 
Cuban  Government,  may  determine. 


176  APPENDIX 

We  hereby  further  agree  to  furnish  to  the  Cuban  Allot- 
ment Committee  for  use  of  the  United  States  Sugar 
Equalization  Board,  Inc.,  a  weekly  statement  showing  : 
First:  The  production  of  sugar  on  each  of  our  planta- 

tions during  the  previous  week  ; 
Second  :  Our  production  to  date  ; 
Third:   Our  shipments  for  export  for  the  week  and 

up  to  date  ; 
Fourth:  Our  sales  for  direct  consumption  in  Cuba  for 

the  week  and  up  to  date  ; 
Fifth:  Our  sales  to  local  buyers  (not  for  direct  con- 

sumption)  for  the  week  and  up   to  date,   and 

names  of  such  buyers  ; 
Sixth:  Our  deliveries  to  Colonos  for  the  week  and 

up  to  date  ; 
Seventh:  Amount  of  sugar  on  hand  at  end  of  each 

week  in  our  possession  wherever  located. 
Yours  truly 


(2) 


*(i)  Sign  here 
(2)  Give  address 


EXHIBIT  8 


AGREEMENT  BETWEEN  THE  UNITED  STATES 
SUGAR  EQUALIZATION  BOARD,  INC.,  AND  HER- 
BERT HOOVER,  UNITED  STATES  FOOD  ADMINIS- 
TRATOR, AND  UNITED  STATES  SUGAR  REFINERS, 
OCTOBER  24,  1918. 

AGREEMENT  entered  into  this  24th  day  of  October, 
1918,  in  the  City  and  State  of  New  York,  between  the 
UNITED  STATES  SUGAR  EQUALIZATION  BOARD,  INC.,  a 
corporation  of  the  State  of  Delaware,  hereinafter  de- 
scribed as  the  ''EQUALIZATION  BOARD,"  and  the  Refiners 
of  Sugar  in  the  United  States  acting  severally,  signatory 
hereto,  hereinafter  described  as  the  "  REFINERS,"  and 


EXHIBIT  8  177 

HERBERT  HOOVER,  as  United  States  Food  Administrator, 
hereinafter  described  as  the  "FOOD  ADMINISTRATOR," 

WlTNESSETH  : 

WHEREAS,  the  Equalization  Board  has  been  created 
and  is  acting  as  an  agency  of  the  United  States  for  the 
purpose  in  part  of  equalizing  the  distribution  and  selling 
price  of  sugar,  and  contemporaneously  with  the  execu- 
tion of  this  Agreement  has  entered  into  an  Agreement 
bearing  even  date  herewith  for  the  purchase  of  raw  sugar 
produced  in  the  Island  of  Cuba  during  the  Crop  Season 
1918-19,  which  Agreement,  described  as  the  "  CUBAN 
AGREEMENT,"  is  hereto  annexed  and  marked  "Exhibit 
A,"  and 

WHEREAS,  with  a  view  to  securing  regular  and  suf- 
ficient supplies  of  sugar  to  the  American  people  and  the 
Army  and  Navy  at  a  reasonable  price,  even  during  the 
disorganized  period  of  world  trade,  the  Equalization 
Board  has,  in  the  interest  of  the  American  people  and  the 
Allies,  purchased  the  Cuban  Sugar  Crop  of  1918-19  for 
distribution  to  the  American  people,  their  Allies  and 
others,  and 

WHEREAS,  the  Food  Administrator  and  the  Equaliza- 
tion Board  are  desirous  of  securing  an  equality  of  dis- 
tribution of  said  sugars  according  to  the  requirements 
or  to  secure  such  exports  from  said  sugar  as  may  be  in 
surplus  and  may  be  determined  by  the  agencies  of  the 
Government  as  necessary  to  meet  its  international  obli- 
gations, and 

WHEREAS,  it  is  necessary  and  advisable  in  order  to 
secure  an  equitable  distribution  of  sugar  throughout  the 
United  States  to  apportion  Cuban  and  other  sugars 
among  the  Refiners  for  their  requirements,  and  to  that 
end  to  continue  THE  AMERICAN  REFINERS'  COMMITTEE, 
and 

WHEREAS,  the  American  Refiners  are  desirous  of  fully 
co-operating  with  the  agencies  of  the  Government  in  the 
purposes  above  set  forth, 


178  APPENDIX 

Now,  THEREFORE,  the  parties  hereto  in  consideration 
of  the  premises  and  the  mutual  covenants  herein  con- 
tained, each  for  itself  and  himself,  for  the  part  or  propor- 
tion of  this  Agreement  to  be  performed  by  it  or  him, 
severally  and  not  jointly,  agree  as  follows  : 

I 

The  Food  Administrator  and  said  Refiners  agree  that 
the  Agreement  of  October  i,  1917,  between  the  Refiners 
and  the  Food  Administrator,  shall  be  and  same  hereby  is 
cancelled  and  annulled  so  far  as  the  rights  and  obliga- 
tions of  the  parties  hereto  to  each  other  are  concerned, 
except  as  to  such  sugars  of  1917-18  crop  as  have  not  been 
delivered. 

II 

Such  of  the  following  named  persons  as  are  officers 
of  companies  signatory  hereto,  are  hereby  appointed  by 
the  Food  Administrator  for  the  period  of  this  agreement 
and  shall  constitute  the  American  Refiners'  Committee 
with  the  powers  and  duties  hereinafter  set  forth 

JAMES  H.  POST,  Chairman 

CLAUS  A.  SPRECKELS 

CHARLES  M.  WARNER 

GEORGE  H.  EARLE,  JR. 

ROBERT  M.  PARKER 

and  the  following  named  persons  who  are  representatives 
of  companies  signatory  hereto  are  appointed  as  alternates 
on  said  committee,  who  shall  have  the  privilege  of  being 
present  at  all  meetings  and  serving  in  the  place  of  any 
absent  member  or  filling  any  vacancies  in  said  Committee 
in  the  order  named 

DWIGHT  P.  THOMAS 

W.  J.  MCCAHAN,  JR. 

BENJAMIN  A.  OXNARD 
M.  E.  GOETZINGER 
JOHN  FARR 


EXHIBIT  8  179 

WILLIAM  HENDERSON 
W.  T.  ELDREDGE 
E.  L.  WEMPLE. 

Ill 

Until  the  3ist  day  of  December,  1919,  the  Refiners 
will  not  purchase  any  sugar  except  from  the  Equalization 
Board,  other  than  such  sugars  as  are  provided  under  the 
said  Agreement  of  October  i,  1917,  and  Hawaiian  sugars 
hereinafter  referred  to,  provided,  however,  that  Refiners 
may  purchase  sugars,  other  than  the  crop  of  1918-19,  for 
delivery  after  December  31,  1919. 

IV 

The  sugar  provided  by  the  Equalization  Board  shall 
be  distributed  among  the  Refiners  who  enter  into  this 
Agreement  to  meet  their  requirements,  in  the  proportions 
set  forth  in  "  Exhibit  B,"  which  is  made  a  part  hereof 
and  in  case  there  is  a  disagreement  between  a  Refiner  and 
The  American  Refiners'  Committee  as  to  apportionment, 
the  matter  shall  be  submitted  to  the  United  States  Food 
Administrator  and  his  decision  shall  be  final,  and  any 
sugar  received  by  a  Refiner  from  any  source  shall  be 
charged  against  his  pro  rata  amount  under  such  distribu- 
tion. The  Hawaiian  sugar  that  may  be  deliverable  under 
any  contract  to  any  Refiner  party  hereto  shall  be  taken 
over  in  rotation  in  an  order  to  be  determined  by  lot  to  be 
drawn  by  the  Chairman  of  the  American  Refiners'  Com- 
mittee and  upon  the  terms  provided  for  in  such  contract 
for  account  of  the  New  York  and  Philadelphia  Refiners, 
parties  hereto,  and  the  rights  and  obligations  of  the  pur- 
chaser under  said  contract  are  to  be  assumed  by  said 
Refiners. 

V 

The  American  Refiners'  Committee  is,  under  the  di- 
rection, supervision  and  control  of  the  Equalization 


l8o  APPENDIX 

Board,  hereby  charged  with  the  duty  and  responsibility 
on  behalf  of  the  Refiners  hereto,  of  arranging,  routing 
and  distributing  to  the  several  Refiners,  the  sugar  to  be 
purchased  as  hereinafter  set  forth  from  the  Equalization 
Board,  and  such  duties  shall,  so  far  as  possible,  be  carried 
out  in  accordance  with  the  requirements  and  convenience 
of  the  several  Refiners. 

VI 

The  several  Refiners,  not  in  any  way  limiting  their 
ordinary  power  or  business  discretion  to  determine  to 
what  extent  they  may  severally  operate  their  refineries, 
agree  to  and  do  hereby  purchase  from  the  Equalization 
Board,  and  the  Equalization  Board  agrees,  subject  to  its 
commitments  from  time  to  time  to  Governments  or  per- 
sons outside  the  United  States  and  to  the  requirements 
of  the  United  States  Government  and  buyers  in  the 
United  States  other  than  refiners,  to  sell  to  the  Refiners 
their  entire  requirements  of  raw  sugar  for  the  operation 
of  their  several  refineries  for  such  time  as  the  respective 
refiners  in  their  respective  judgments  determine  to  oper- 
ate their  respective  refineries,  for  the  period  beginning 
with  the  date  of  this  Agreement  and  ending  on  December 
31,  1919,  (except  such  raw  sugars  as  are  purchased  by  the 
Refiners  under  the  Agreement  of  October  i,  1917,  and 
the  Hawaiian  Contracts  herein  referred  to) ;  and  they 
severally  agree  not  to  purchase  any  sugar  from  any  per- 
son, country  or  source  of  supply,  during  said  period, 
other  than  from  the  Equalization  Board. 

For  all  such  purchases  of  sugar  from  Cuba  the  several 
Refiners  agree  to  pay  the  price  of  seven  and  twenty- 
eight  one-hundred ths  cents  (7.28)  per  pound,  96  degree 
average  outturn  polarization  (duty,  if  any,  paid).1 

1  For  sugar  polarizing  over  96  degrees  there  shall  be  added  to  the  price  70. 
per  100  pounds  per  degree  up  to  98  degrees.  For  sugar  polarizing  under  96 
degrees  there  shall  be  deducted  from  the  price  120.  per  100  pounds  per  degree 
down  to  94  degrees.  For  sugar  polarizing  between  94  degrees  down  to  93  degrees 
there  shall  be  deducted  from  the  price  lye.  per  100  pounds  per  degree,  fractions 
in  proportion. 


EXHIBIT  8  l8l 

All  sugar  furnished  the  Refiners  from  Cuba  shall  be 
settled  for  by  each  Refiner  on  the  same  terms  and  con- 
ditions under  which  said  sugar  was  purchased  by  the 
Equalization  Board  under  the  Cuban  Agreement.  The 
Refiners  severally  agree  for  their  proportions  of  the 
Cuban  sugar  hereby  purchased  by  them  to  pay  the 
amounts  required  to  be  paid  by  the  Equalization  Board, 
under,  by  and  in  accordance  with  the  terms  of  the  Cuban 
Agreement  and  in  addition  thereto  to  pay  to  the  Equaliza- 
tion Board  the  difference  between  the  amount  per  pound 
they  are  required  to  pay  under  the  Cuban  Agreement  for 
the  sugar  delivered  and  7.28  cents  per  pound  for  96 
degree  test. 

The  Equalization  Board  states  that  the  amount  so 
paid  to  it  may  be  used  by  it  for  the  liquidatioh  of  any 
losses  it  may  incur  on  'excess  stocks  of  sugar  purchased 
by  it  or  in  equalizing  the  distribution  or  price  of  sugar 
to  the  American  people.  Any  balance  in  the  treasury 
of  the  Equalization  Board  after  the  discharge  of  its  obli- 
gations hereunder  and  other  liabilities  belongs  to  its  only 
stockholder,  the  United  States. 

VII 

The  Refiners  severally  agree  to  receive,  accept  and 
pay  for  any  sugar,  other  than  from  Cuba,  which  may  be 
purchased  by  the  Equalization  Board  from  time  to  time, 
for  the  requirements  of  such  Refiners,  respectively  as 
stated  in  paragraph  VI,  at  the  price  of  seven  and  twenty- 
eight  one-hundred ths  (7.28)  cents  per  pound  96  degree 
test,  average  outturn  polarization  (duty,  if  any,  paid) 
delivered  at  refinery,  with  allowances  for  differences  in 
test  as  specified  in  Paragraph  VI,  provided  that  the 
Sugar  Equalization  Board  is  not  required  to  deliver 
sugar  under  this  and  the  preceding  Paragraph  VI  unless 
due  notice  of  the  requirements  of  such  refiner  is  given  to 
the  said  Board  and  the  sugars  are  reasonably  obtainable 


182  APPENDIX 

\ 

at  a  delivered  duty  paid  price  of  seven  and  twenty-eight 
one-hundredths  cents  (7.28)  per  pound  or  less. 

VIII 

Marine  insurance  on  sugar  purchased  by  the  Equaliza- 
tion Board  on  a  cost  and  freight  basis  shall  be  arranged 
by  the  American  Refiners'  Committee  under  direction  of 
the  Equalization  Board,  from  shore  to  shore,  including  the 
risk  of  lighterage  to  and  from  the  vessel  at  ports  of  load- 
ing and  discharge,  the  cost  thereof  to  be  paid  by  the  Re- 
finers severally  and  charged  against  the  price  of  the  sugar 
delivered  hereunder. 

IX 

The  Equalization  Board,  however,  reserves  the  right 
in  its  sole  discretion,  from  time  to  time,  to  change  the 
price  to  the  Refiners  as  to  any  sugar  to  be  delivered  under 
this  Agreement,  upon  giving  fifteen  (15)  days  previous 
notice  of  such  change  of  price,  and  in  case  of  any  such 
change  of  price,  settlement  by  the  Refiners  for  their 
purchases  of  all  sugar  shall  thereafter  be  upon  the  basis 
of  such  changed  price  instead  of  the  seven  and  twenty- 
eight  hundredths  (7.28)  cents  per  pound  96°  test  above 
mentioned.  Due  regard  to  be  given  allowances  up  and 
down  from  96  degrees. 


In  making  settlement  for  sugars  purchased  by  them 
hereunder,  the  Colonial  Sugars  Company  and  the  Leon 
Godchaux  Company,  Ltd.,  shall  each  be  entitled  to 
charge  against  any  sum  or  sums  to  be  severally  paid  by 
them  (to  cover  inland  freight  to  refining  points  when 
paid  by  such  Refiners)  the  sum  of  three  and  one-half 
(si)  cents  per  one  hundred  pounds  of  sugar  purchased 
by  them  from  the  Sugar  Equalization  Board  aforesaid. 
These  charges,  however,  may  be  cancelled  or  changed 


EXHIBIT  8  183 

from  time  to  time  at  the  option  of  the  Equalization 
Board. 

XI 

Each  of  the  undersigned  Refiners  agrees  that  it  will 
sell  all  sugar  refined  by  it  at  a  price  not  more  than  one 
dollar  fifty-four  cents  ($1.54)  net  per  hundred  (100) 
pounds  wholesale  of  refined  sugar  on  the  basis  of  Fine 
Granulated  sugar  in  barrels  or  in  100  pound  bags  (when 
used  as  the  standard  basis)  f.  o.  b.  refinery  above  the 
price  for  96°  centrifugal  sugar  paid  to  the  Equalization 
Board  provided  for  in  this  Agreement,  with  such  differen- 
tials as  are  now  shown  on  its  official  price  list,  same  being 
subject  to  change  from  tune  to  time  on  consent  and 
approval  of  the  Equalization  Board.  Said  net  margin 
shall  be  exclusive  of  the  2%  cash  discount,  payment  in 
ten  days  to  the  trade.  This  margin  is  determined  on  a 
delivered  duty  paid  price  of  from  7.10  i  to  7.35^  per  pound 
for  96°  test  raw  sugar,  and  in  case  the  price  provided 
for  in  this  Agreement  goes  below  7.10^  per  pound  the 
margin  aforesaid  shall  be  decreased  in  such  a  manner  as 
to  return  substantially  the  same  profit  to  the  Refiner. 
In  case  the  basic  price  goes  above  7.35^  per  pound,  said 
margin  shall  be  increased  to  accomplish  the  same  pur- 
pose. It  is  mutually  agreed  between  the  parties  hereto 
that  said  margin  shall  be  promptly  revised  by  the  parties 
hereto  from  time  to  time  in  case  of  changes  in  cost  of 
refining  and  of  wholesale  distribution,  or  in  the  event  of 
an  excise  or  similar  tax. 

It  is  further  understood  that  the  margin  upon  any 
sugar  purchased  under  the  Hawaiian  Contracts  above 
referred  to  may  be  increased  by  the  amount  of  the  differ- 
ential under  which  such  sugar  is  purchased. 

XII 

It  is  further  understood  that  inasmuch  as  this  Agree- 
ment has  been  entered  into  at  the  request  of  the  Food 


1 84  APPENDIX 

Administration  and  the  Equalization  Board  for  the  pur- 
poses above  recited,  in  view  of  the  limitation  on  the  price 
to  be  secured  by  the  Refiner  for  its  refined  product,  it  is 
mutually  agreed  between  the  Equalization  Board  and  the 
Refiners  that  in  case  of  an  advance  or  decline  in  the 
price  of  sugar  from  7.28^  per  pound  for  96  degree  test, 
raw  basis,  due  to  any  action  of  the  Equalization  Board, 
the  Equalization  Board  will  pay  to  each  of  the  Refiners 
in  the  event  of  a  decline  in  price,  and  each  of  the  Re- 
finers will  pay  to  the  Equalization  Board  in  the  event  of 
a  raise  in  price,  a  sum  equivalent  to  the  change  in  price 
multiplied  by  the  number  of  pounds  of  raw  or  refined 
sugar  (raw  basis)  l  which  each  of  the  Refiners  may  have 
purchased  hereunder,  and  which  is  undelivered  or  on 
hand  or  in  transit  on  the  date  when  such  change  takes 
place. 

XIII 

Each  Refiner  signatory  hereto  agrees  to  conduct  his 
or  its  export  business  under  the  direction  of  the  Equaliza- 
tion Board,  and  to  export  or  distribute  to  the  domestic 
trade  such  proportion  of  its  refined  sugar  as  the  Equaliza- 
tion Board  may  direct,  upon  prices  and  terms  which 
will  yield  the  Refiner  the  same  margin  as  is  specified  in 
Paragraph  XI,  and  in  the  event  of  sales  for  export  at  a 
higher  price,  the  excess  over  the  Refiners'  margin  is  to  be 
for  the  account  of  the  Equalization  Board. 

The  Equalization  Board  furthermore  agrees  in  con- 
ducting its  export  business  that  it  will  endeavor  where 
conditions  permit  to  provide  (in  case  the  Refiners 
desire)  additional  quantities  of  dutiable  raw  sugar,  after 
giving  due  consideration  to  the  requests  and  requirements 
of  other  nations,  or  buyers. 

1  Refined  sugar  shall  be  reduced  to  raw  basis  by  adding  seven  (7)  per  cent, 
to  its  weight. 


EXHIBIT  8  185 

XIV 

So  long  as  raw  sugars  are  available  for  Refiners'  re- 
quirements, the  said  Food  Administrator  and  the  said 
Equalization  Board  will  not  restrict  the  sale  and  dis- 
tribution of  Refined  Sugar  made  from  raw  sugar  pur- 
chased under  this  Agreement.  The  Food  Administrator 
or  the  Equalization  Board  shall  have  the  right  to  super- 
vise the  domestic  distribution  of  sugar  during  the  life 
of  this  contract.  No  restrictions  shall  be  placed  upon 
domestic  consumption  until  after  the  Refiners  have  been 
consulted. 

XV 

In  the  event  that  any  Refiner  named  in  "Exhibit  B" 
does  not  enter  into  this  Agreement  its  pro  rata  propor- 
tion of  sugar  shall  be  allotted  to  the  Refiners  signatory 
hereto,  if  they  desire,  in  the  proportions  and  at  the  price 
and  upon  the  terms  and  conditions  herein  provided  as  to 
the  sugar  purchased  hereunder. 

XVI 

From  October  i,  1919,  to  December  31,  1919,  if  re- 
quested so  to  do  by  the  Equalization  Board,  the  Refiners 
agree  to  refine  any  raw  sugar  the  Equalization  Board  may 
have  purchased  and  not  sold  to  the  Refiners  at  the  Re- 
finers' margin  then  in  effect  to  be  ascertained  as  provided 
in  Paragraph  XI,  less  three  (3)  cents  per  100  pounds. 
The  Refiners  agree  to  offer  said  sugar  for  sale  and  dis- 
tribution, if  requested  so  to  do,  at  such  price  and  on  such 
terms  as  said  Equalization  Board  may  direct,  for  a  com- 
mission of  three  (3)  cents  per  100  pounds. 

XVII 

Should  any  unforeseen  circumstances  such  as  war, 
rebellion,  insurrection,  political  disturbances,  strikes, 
lack  of  fuel,  marine  loss,  fire,  explosion,  riots  or  civil 


l86  APPENDIX 

disturbances,  embargoes,  prohibitions,  or  other  causes, 
either  in  the  United  States,  Cuba  or  elsewhere,  prevent 
the  Equalization  Board  from  making  delivery  of  the 
sugar  according  to  the  terms  hereof,  it  shall  so  advise 
the  Refiners'  Committee  immediately  and  be  released 
from  delivery  of  such  portion  of  the  sugar  as  cannot  be 
delivered,  but  the  Equalization  Board  agrees  to  use  due 
diligence  to  carry  out  this  Agreement  in  its  entirety, 
notwithstanding  the  circumstances  mentioned. 

XVIII 

All  matters  of  disagreement  arising  under  this  Agree- 
ment between  the  Equalization  Board  and  any  other 
party  hereto  which  cannot  be  adjusted  by  them  to  their 
mutual  satisfaction,  shall  be  left  to  arbitration  in  Wash- 
ington. The  Equalization  Board  and  the  American  Re- 
finers' Committee  shall  each  select  one  arbitrator  and 
the  two  so  selected  shall  select  a  third,  and  the  decision 
of  any  two  of  said  arbitrators  shall  be  final  and  con- 
clusive upon  the  parties  thereto.  In  case  the  disagree- 
ment is  between  only  one  Refiner  and  the  Equalization 
Board,  the  arbitrator  provided  to  be  appointed  by  the 
American  Refiners'  Committee  shall  be  appointed  by 
such  one  Refiner.  Any  expense  attached  to  such  arbitra- 
tion shall  be  divided  equally  among  the  parties  to  the 
arbitration. 

XIX 

It  is  agreed  by  all  parties  hereto  that  said  Equaliza- 
tion Board  may  earn  a  profit  on  any  sugar  it  may  pur- 
chase and  resell  to  said  Refiners  or  on  any  sugar  it  may 
purchase  from  said  Refiners  and  resell  for  Export. 

XX 

It  is  further  understood  that  the  individual  members 
of  the  said  American  Refiners'  Committee  are  acting 


EXHIBIT  8  187 

herein  as  volunteers,  in  a  purely  administrative  capacity, 
and  accordingly  the  parties  hereto  agree  that  said  mem- 
bers of  the  said  Committee  shall  not  incur  any  personal 
liability,  individually  or  collectively,  under  the  terms  of 
this  contract,  nor  be  responsible  for  any  damage  of  what- 
ever kind  connected  with  any  matter  or  thing  relating 
to  this  contract ;  nor  shall  they  be  responsible  or  liable 
for  any  act,  fault  or  misconduct  of  any  agents  or  persons 
employed  by  them  and  the  parties  hereto  hereby  further 
release  and  discharge  the  said  individual  members  of  the 
said  Committee  from  any  and  all  claims  of  whatever 
kind  for  personal  liability  or  responsibility  as  aforesaid. 

XXI 

The  Refiners  severally  agree  to  pay  their  pro  rata 
share  on  the  basis  of  sugar  purchased  of  any  expenses 
incurred  by  the  American  Refiners'  Committee  in  carry- 
ing out  this  Agreement. 

XXII 

This  Agreement  shall  remain  in  full  force  and  effect 
up  to  and  including  December  31,  1919,  and  shall  cover 
all  sugar  shipped  or  in  transit  prior  to  that  date. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  sub- 
scribed this  Agreement  as  of  the  day  and  year  first  above 
written. 

BASIS  OF  PROPORTIONATE  DISTRIBUTION  AS  FIXED  ON  NOVEM- 
BER 4,  1918,  AT  A  MEETING  OF  THE  AMERICAN  REFINERS' 
COMMITTEE  OF  THE  UNITED  STATES  FOOD  ADMINISTRATION 

American  Sugar  Refining  Company 38.001  per  cent 

Arbuckle  Brothers 6.613    " 

California  &  Hawaiian  Sugar  Refining  Company      6.945    " 

Colonial  Sugars  Company 2.185" 

Federal  Sugar  Refining  Company 8.645   " 

William  Henderson  1.220   " 


1 88  APPENDIX 

Imperial  Sugar  Refining  Company    .     .     .     .     .  1.122  per  cent 

The  W.  J.  McCahan  Sugar  Refining  Company  2.489 

National  Sugar  Refining  Company 11.940 

Pennsylvania  Sugar  Company 4-537 

Revere  Sugar  Refining  Company 2.985 

Savannah  Sugar  Refining  Corporation       .     .     .  2.149 

Warner  Sugar  Refining  Company 6.187 

Western  Sugar  Refining  Company 3-549 

The  Leon  Godchaux,  Company,  Limited    .     .     .  1.433 


EXHIBIT  9 

AGREEMENT  WITH  THE  UNITED  STATES  FOOD 
ADMINISTRATOR  AS  TO  SALE  AND  DISTRIBUTION 
OF  BEET  SUGAR  CROP  1918-1919 

THIS  AGREEMENT,  entered  into  this  i8th  day  of 
September,  1918,  between  Herbert  Hoover,  United  States 
Food  Administrator,  acting  for  and  in  behalf  of  the 
President  of  the  United  States,  and 

,  of , 

State  of ,  hereinafter  called 

the  Producer, 

WlTNESSETH,  THAT: 

WHEREAS,  The  United  States  Food  Administrator, 
pursuant  to  an  Act  of  Congress,  approved  August  10, 
1917,  known  as  the  "Food  Control  Act,"  has  issued, 
and  from  time  to  time  continues  to  issue  rules  and  regu- 
lations relating  to  the  conduct  of  the  business  of  all  per- 
sons importing,  manufacturing,  storing  or  distributing 
sugar;  and 

WHEREAS,  The  said  Food  Administrator  is  desir- 
ous of  securing  an  equitable,  fair  and  economic  distri- 
bution of  available  sugars  among  the  various  consuming 
communities ;  of  minimizing  the  burdens  upon  the 
transportation  facilities  required  for  such  distribution; 
and  of  preventing  unjust,  unreasonable,  unfair  and 
wasteful  commissions,  profits  and  practices ;  and 


EXHIBIT  9  189 

WHEREAS,  The  United  States  Food  Administrator 
has  urgently  requested  all  producers  of  beet  sugar  in 
the  United  States  to  enter  into  an  agreement  with  him, 
in  order  to  accomplish  the  purposes  contemplated  by 
said  Act ; 

Now,  THEREFORE,  In  consideration  of  the  premises 
and  agreements  of  the  United  States  Food  Adminis- 
trator hereafter  set  forth,  the  undersigned  producer 
hereby  agrees : 

1.  That  in  selling  and  distributing  beet  sugar  pro- 
duced from  the  crop  of  1918-19,  it  shall  observe,  re- 
spect and  be  governed  by  any  and  all  regulations  which 
said  United  States  Food  Administrator,  either  directly 
or   through   his   duly   appointed   Food   Administration 
Sugar  Distributing  Committee,  may  from  time  to  tune 
prescribe  under  the  provisions  of  said  Act. 

2.  That  it  will  ship  sugar  at  such  times,   to  such 
places,  and  in  such  quantities  as  may  be  directed  by 
the  United  States  Food  Administrator,  through  the  said 
Sugar  Distributing  Committee;    that  it  will  route  all 
sugars  as  directed  by  that  Committee;    that  it  will 
promptly  comply  with  any  and  all  directions  for  change 
of  destination  and  route,  or  for  reconsignment ;    and 
that  it  will  ship  all  sugar  sight  draft  attached  to  bill  of 
lading,  unless,  at  its  request,  it  is  otherwise  permitted 
by  the   Sugar  Distributing  Committee.     In  case  such 
request  is  made  and  such  permission  given,  the  loss,  if 
any,  shall  be  borne  by  the  requesting  producer.     Pro- 
vided that  nothing  in  this  agreement  shall  authorize 
the  United  States  Food  Administrator  to  direct  distri- 
bution to  a  particular  individual,  firm  or  corporation. 

3.  That  it  will  sell  all  sugar  at  not  to  exceed  the 
basic  market  price  for  fine  granulated  cane  sugar  in  100 
pound  bags  or  barrels  at  seaboard  refining  points,  as 
established  by  the  United  States  Food  Administration, 
plus  such  prepaid  basing  freight  rates  as  may  be  ruling 
at  point  of  destination  on  day  of  sale,  or  on  such  other 


I90  APPENDIX 

day  as  shall  be  directed  by  the  United  States  Food  Ad- 
ministration, less  the  differential,  if  any,  between  cane 
and  beet  sugar  which  may  then  be  in  force  at  point  of 
destination,  the  said  Committee  being  authorized  to 
establish  or  revoke  a  differential  whenever  it  may  be 
deemed  advisable.  Provided  that  no  differential  shall 
be  established  at  any  point  unless  it  is  established  at  all 
other  points  within  the  same  zone.  For  the  purpose  of 
this  agreement  the  United  States  shall  be  divided  into 
such  zones  as  may  be  approved  by  the  United  States 
Food  Administrator;  provided,  that  unless  otherwise 
permitted  by  the  United  States  Food  Administrator, 
such  price  shall  not  exceed  the  maximum  basic  price 
of  Nine  Dollars  per  hundred  pounds  at  seaboard  refin- 
ing points. 

4.  That  it  will  not  tender  for  regular  trade  distribu- 
tion at  ruling  market  prices  any  "off  sugar,"  or  any 
sugar  which  is  inferior  to  standard  granulated  sugar. 
That  should   the  producer  have  inferior  sugar  in  its 
possession,  it  shall  notify  the  Sugar  Distributing  Com- 
mittee of  such  fact.     After  the  Committee  is  satisfied 
that  the  sugar  reported  is  actually  "off  sugar,"  said 
Committee,  or  the  producer  itself  under  the  Commit- 
tee's instructions,  may  dispose  of  such  product  at  a  dis- 
count from  the  ruling  market  price,  the  resulting  loss 
to  be  borne  exclusively  by  the  producer. 

5.  That  it  will  promptly  make  complete  and  true 
reports   to   the   Sugar   Distributing   Committee   of   all 
sales  made  by  it  at  such  intervals  and  in  such  forms  as 
may  be  required  by  said  Committee. 

6.  That  it  will  promptly  remit  to  the  Sugar  Dis- 
tributing Committee  its  proportionate  amount  (based 
upon   production),   of   all   expenses   actually  paid,   in- 
curred, or  estimated  to  be  incurred  by  said  Committee 
in  making  the  distribution  herein  provided  for. 

7.  That  on  the  3ist  day  of  December,   1918,  and 
every  three  months  thereafter,  the  said  Food  Adminis- 


EXHIBIT  9  191 

tration  Sugar  Distributing  Committee  will  calculate 
the  average  net  proceeds  per  pound  of  sugar  then  sold 
and  invoiced  by  all  producers  who  have  entered  into 
agreements  with  the  United  States  Food  Administra- 
tion similar  to  this  agreement,  and  cause  copies  of  the 
results  of  such  calculation  to  be  mailed  to  each  of  such 
producers.  The  difference  between  such  average  and 
the  actual  amounts  paid  to  the  respective  producers 
shall  be  temporarily  adjusted  by  requiring  producers 
whose  actual  price  is  in  excess  of  such  calculated  aver- 
age, to  pay  such  excess  to  the  United  States  Food  Ad- 
ministrator, or  to  a  representative  appointed  by  him 
who  will  distribute  such  excess  proportionately  to  those 
producers  whose  actual  price  is  less  than  the  calculated 
average. 

8.  That  prior  to  March  3ist,  1919,  the  undersigned, 
together  with  all  other  beet  sugar  producers  who  have 
entered  into  agreements  as  aforesaid,  will  select  an 
Adjustment  Committee  of  five  persons.  All  producers 
operating  east  of  the  Missouri  River  shall  constitute 
and  be  deemed  to  be  a  separate  group;  and  all  pro- 
ducers operating  west  of  the  Missouri  River  shall  con- 
stitute and  be  deemed  to  be  a  separate  group.  Each 
of  these  separate  groups  shall  select  two  members  of 
said  Adjustment  Committee,  and  such  four  members 
shall  select  the  remaining  fifth  member  of  said  Com- 
mittee. Said  Adjustment  Committee  shall  thereupon 
determine  the  amount  of  allowance,  if  any,  per  hun- 
dred pounds,  which  shall  be  paid  by  one  group  to  the 
other  group,  in  order  to  correct  any  injustice  resulting 
from  distribution  under  this  agreement.  The  Adjust- 
ment Committee  shall  report  their  determination  to  the 
Food  Administration  Sugar  Distributing  Committee, 
and  thereupon  said  Distributing  Committee  shall  ad- 
just its  calculations  in  conformity  with  such  determi- 
nation and  all  exchange  payments  between  the  United 
States  Food  Administrator  or  his  representative  and 


IQ2  APPENDIX 

the  undersigned   shall  be  made  in  accordance   there- 
with. 

9.  That  at  the  close  of  the  1918-1919  selling  cam- 
paign, but  not  later  than  August  3ist,  1919,  the  said 
Sugar  Distributing  Committee  shall  prepare  a  final  set- 
tlement statement,  showing  the  actual  price  per  pound 
of  sugar  received  by  each  producer,  the  average  net 
proceeds  per  pound  of  sugar  resulting  from  the  sale 
of  all  sugars  constituting  the  crop  of  1918-1919,  the 
allowance  between  groups  as  determined  by  the  Adjust- 
ment Committee,  and  the  amount  that  each  producer 
should  receive  for  his  sugar,  based  upon  such  average 
price,  and  as  modified  by  the  Adjustment  Committee; 
provided  that  all  ~  unsold  sugars  on  hand  on  August  31, 
1919,  shall  be  inventoried  in  such  manner  and  at  such 
price  as  the  Food  Administration  Sugar  Distributing 
Committee  may  direct. 

In   consideration   of   the   foregoing   agreements,   the 
United  States  Food  Administrator  agrees  : 

10.  That  the  President  of  the  United  States,  act- 
ing by  and  through  the  said  Food  Administrator,  has 
appointed  a  committee  of  the  United  States  Food  Ad- 
ministration, to  be  known  as  the  Food  Administration 
Sugar  Distributing  Committee,  to  carry  out,  subject  to 
his  approval,  the  provisions  of  said  Act  of  Congress 
so  far  as  they  relate  to  the  distribution  of  beet  sugar, 
which  Committee  is  composed  of  the  following  persons, 
to- wit : 

W.  L.  PETRIKIN,  Chairman, 
W.  H.  HANNAM, 
S.  H.  LOVE, 
E.  C.  HOWE, 

S.  W.  SlNSHEIMER, 

H.  A.  DOUGLAS, 
W.  P.  TURNER. 

11.  That  he  will  cause  said  Sugar  Distributing  Com- 
mittee to  direct  the  distribution  of  the  beet  sugar  crop 


EXHIBIT  9  193 

herein  referred  to  in  the  most  economical  and  efficient 
method  consistent  with  an  equitable  distribution  of 
sugar  where  needed  throughout  the  United  States. 

12.  That  the  said  Committee  shall  establish  pack- 
age differentials  for  package  goods  not  in  excess  of  dif- 
ferentials for  similar  package  goods  established  for  the 
Cane  Refiners  of  the  United  States;    shall  from  time 
to  time  issue  and  mail  to  each  producer  schedules  of 
prepaid  basing  rates  at  the  different  shipping  points, 
to  be  based  on  freight  rates  from  seaboard   refining 
points ;   and  shall  issue  and  mail  to  each  producer  uni- 
form price  lists,  showing  seaboard  base  price,  and  the 
terms  upon  which  sugar  may  be  sold,  including  the 
differential,  if  any,  between  cane  and  beet  sugar.     No 
sale  of  sugar  shall  be  made  by  any  producer  except  at 
the  price,  differential  and  terms  stated  in  the  last  price 
list  issued.    Whenever  a  change  occurs  in  price,  terms 
or  differential,  the  said  Committee  shall  issue  a  new 
price  list,  which  shall  not  become  effective  until  after  a 
copy  thereof  has  been  mailed  to  and  approved  by  the 
United  States  Food  Administrator. 

13.  Nothing  in  this  contract  shall  require  the  United 
States  Food  Administrator  or  his  representative  to  make 
any  payments  except  out  of  funds  paid  to  him  under  this 
contract  or  similar  uniform  contracts  with  other  pro- 
ducers. 

14.  Sugar  shall  be  delivered  to  the  United  States 
Government  for  Army  and  Navy  uses  and  for  Red 
Cross,  Y.M.C.A.,  Belgian  Relief,  Salvation  Army  and 
kindred  organizations  when  and  in  such  amounts  as 
the  Government  may  specify,  at  prices  to  be  fixed  by 
the  United  States  Food  Administrator,  and  the  net  pro- 
ceeds of  such  sugar  shall  be  included  in  calculating  the 
general  average  net  proceeds  per  pound  of  all  sugar 
sold  by  producers  entering  into  this  agreement. 

15.  The  output  of  any  beet  sugar  producer  whose 
output  is  commandeered  by  the   Government  of  the 


194  APPENDIX 

United  States  or  the  Food  Administration  for  public 
purposes,  shall  not  so  far  as  it  is  reasonably  possible  to 
prevent  the  same,  be  permitted  to  be  handled,  sold  or 
distributed  in  any  manner  which  will  detrimentally 
affect  the  markets  of  the  producer,  or  the  net  proceeds 
resulting  from  the  sale  and  distribution  of  sugar  as 
provided  in  this  agreement. 

1 6.  It  is   understood   and   agreed  by   the   producer 
that  a  violation  of  any  of  the  terms  of  this  agreement 
may  result  in  and  be  cause  for  revocation  of  its  license. 

17.  This  agreement  shall  remain  in  full  force  and 
effect  from  the  date  hereof  until  the  final  disposition  of 
the  crop  of  1918-1919. 

IN  WITNESS  WHEREOF,  the  parties  hereunto  have  signed 
this  agreement  the  day  and  year  first  above  written. 

SUPPLEMENTARY  AGREEMENT  WITH  THE   UNITED 

STATES   FOOD   ADMINISTRATOR  AS  TO  BEET 

SUGAR   CROP   1918-1919 

THIS  AGREEMENT,  entered  into  this  i8th  day  of 
September,  1918,  between  Herbert  Hoover,  United 
States  Food  Administrator,  acting  for  and  in  be- 
half of  the  President  of  the  United  States,  and  the 

Sugar  Company  of , 

State    of    ,    hereinafter   called 

the  Producer, 

WlTNESSETH,   THAT: 

WHEREAS,  the  parties  to  this  contract  have  entered 
into  a  uniform  agreement  of  even  date  herewith  in  re- 
gard to  the  distribution  of  beet  sugar  produced  from  the 
crop  of  1918-1919 ;  and 

WHEREAS,  the  Producer  together  with  other  east- 
ern producers  is  in  a  special  situation  as  regards  distri- 
bution ; 

Now,  THEREFORE,  In  consideration  of  the  premises 
and  of  said  agreement  of  even  date  herewith,  it  is  hereby 
mutually  agreed : 


EXHIBIT  10  195 

1.  That  when  the  adjustment  referred  to  in  Para- 
graph 8  of  the  principal  agreement  of  even  date  here- 
with has  been  made,  but  in  any  event  prior  to  March 
31,    1919,   all  producers  located  east  of   the  Missouri 
river   and    entering   into    a   supplementary   agreement 
similar  to   this,  shall  select  an    "Eastern  Adjustment 
Committee"   of  three  persons.     Said  committee  shall 
consider  the  location  of  the  various  factories  among 
such  producers  constituting  the  eastern  group,  and  shall 
determine   whether   the   same   net  price   per   hundred 
pounds  among  all  the  members  of  said  group  is  in  all 
respects  just  and  equitable. 

2.  If  the  committee  shall  find  that  such  a  net  price 
is  not  just  and  equitable,  it  shall  then  cause  proper  and 
equitable  deductions  or  additions  to  be  made  from  or  to 
the  various  amounts  due  and  payable  to  such  eastern 
producers  as  adjusted  and  reported  by  the  Food  Ad- 
ministration Sugar  Distributing  Committee. 

3.  The    Adjustment    Committee    shall    report    their 
determination  to  the  Food  Administration  Sugar  Dis- 
tributing Committee,  which  shall  adjust  its  calculations 
in   conformity   with   such   determination,    and   all   ex- 
change payments  between  the  United  States  Food  Ad- 
ministrator or  his  representative  and  the  undersigned 
shall  be  made  in  accordance  therewith. 

IN  WITNESS  WHEREOF  :  the  parties  hereto  have 
signed  this  supplementary  agreement  the  day  and  year 
first  above  written. 


EXHIBIT   10 

AGREEMENT  WITH   UNITED   STATES   FOOD   AD- 
MINISTRATION AS  TO  LOUISIANA   SUGARS, 
1918-1919   CROP 

THIS  AGREEMENT,  entered  into  this day  of 

,  1918,  between  Herbert  Hoover, 


196  APPENDIX 

United  States  Food  Administrator,  acting  in  this  behalf 

for  the  President  of  the  United  States,  and 

of 

,  hereinafter  called  the  producer, 

WlTNESSETH,   THAT 

WHEREAS,  the  United  States  Food  Administrator, 
pursuant  to  the  Act  of  Congress  approved  August  10,, 
1917,  known  as  the  "Food  Control  Act/'  has  issued 
regulations  for  the  conduct  of  the  business  of  all  persons 
importing,  manufacturing,  storing  or  distributing  sugar, 
and  desires  under  said  Act  to  secure  an  equitable  dis- 
tribution of  the  cane  sugar  crop  of  the  season  of  1918- 
1919  and  to  prevent  unjust,  unreasonable,  unfair  and 
wasteful  commissions,  profits,  and  practices,  and 

WHEREAS,  the  United  States  Food  Administrator 
has  requested  all  producers  of  cane  sugar  in  the  State 
of  Louisiana  to  enter  into  an  agreement  with  him  cover- 
ing the  sale  and  distribution  of  all  cane  sugar  produced 
in  the  State  of  Louisiana  and  manufactured  for  direct 
consumption,  and 

•  WHEREAS,  the  United  States  Food  Administrator 
has  appointed  a  committee  of  the  United  States  Food 
Administration  to  be  called  the  Louisiana  Sugar  Com- 
mittee, and,  subject  to  his  approval,  to  superintend  the 
distribution  of  Louisiana  sugar  and  carry  out  the  pro- 
visions of  this  contract.  A  majority  of  said  Committee 
shall  constitute  a  quorum  and  the  assent  of  four  members 
of  said  Committee  at  a  meeting  duly  called  shall  be  con- 
sidered the  action  of  the  Committee.  The  Committee 
shall  be  composed  of  the  following  persons,  and  in  the 
event  of  vacancies  occurring  the  .United  States  Food 
Administrator  shall  appoint  successors  to  all  such 
vacancies : 

R.  E.  MILLING,  Chairman, 

C.  D.  KEMPER, 

E.  J.  GAY, 

J.  C.  LEBOURGEOIS, 


EXHIBIT   10  197 

W.  J.  BARKLEY, 

E.  A.  PHARR, 

E.  A.  BURGUIERES. 

WHEREAS,  the  undersigned 

is  a  producer 

of  cane  sugar  and  is  desirous  of  aiding  and  promoting 
the  efficient  administration  of  said  Act  and  of  securing 
the  purpose  contemplated  by  said  Act  by  agreement 
as  authorized  by  Section  2  of  the  aforesaid  Act  of 
Congress ; 

Now,  THEREFORE,  in  consideration  of  the  premises 
and  the  agreements  of  the  United  States  Food  Adminis- 
trator hereafter  set  forth,  the  producer  hereby  agrees : 

(1)  That  in  selling  and  distributing  Louisiana  cane 
sugar  he  will  observe  and  respect  and  be  governed  by 
any  and  all  orders  and  regulations  which  said  United 
States   Food   Administrator,    through   the   said   Sugar 
Committee  may  from  time  to  time  make  or  prescribe,  or 
any  general  or  special  regulations  issued  under  the  pro- 
visions of  said  Act. 

(2)  That  the  "basic  price"  of  fine  granulated  sugar 
at  any  time  for  the  purposes  of  this  contract  shall  be 
that  price  which  is   then  determined  by   the  United 
States  Food  Administrator  under  the  provisions  of  his 
uniform  contracts  with  the  sugar  refiners  of  the  United 
States  dated  October  i,  1917,  as  the  maximum  price 
which  may  be  charged  by  such  refiners  for  fine  granulated 
in  barrels  or  one  hundred  pound  bags  f.  o.  b.  seaboard 
points  with  the  customary  discounts,  terms  and  con- 
ditions, which  contract  is  on  file  with  the  United  States 
Food  Administrator  and  made  part  hereof  by  reference ; 
and  the  basic  price  of  Louisiana  sugars  shall  be'  such 
basic  price  less  the  following  differentials : 

Plantation  granulated No  differential 

White  clarified oicpercwt. 

Off  plantation  granulated IDC   "     " 

Off  white isc   "     " 


1 98 


APPENDIX 


Choice  yellow  clarified iScpercwt. 

Prime  yellow  clarified 20  c 

Kettle         20  c 

Off  yellow  clarified 300 

Seconds  and  thirds  (ist  group) 80  c 

"        "      (2nd  group) 90  c 

"          "        "      (3rd  group) i.oo 

"      (4th  group) 1. 10 

"      (sth  group) 1.20 

The  differential  on  all  grades  of  semi-refined  direct 
consumption  sugars  not  listed  above  shall  be  the  differ- 
ential indicated  for  sugars  of  equal  grade,  or  if  of  an 
intermediate  grade  at  the  differential  of  the  listed  grade 
next  below;  and  the  differential  on  sugars,  the  grade 
and  price  of  which  cannot  be  thus  determined,  shall  be 
fixed  by  the  said  Sugar  Committee. 

The  above  grades  shall  be  determined  with  reference 
to  the  standard  samples  thereof  as  fixed  by  the  New 
Orleans  Sugar  and  Rice  Exchange  with  the  approval  of 
the  United  States  Food  Administration  and  now  on 
file  with  said  Exchange.  In  case  of  dispute  regarding 
the  grade  the  final  decision  shall  be  made  by  the  Louisiana 
Sugar  Committee. 

(3)  That  unless  the  aforesaid  Louisiana  Sugar  Com- 
mittee permits  the  sale  at  a  lower  price  by  reason  of 
deterioration,  or  sets  a  lower  price  for  any  or  all  grades 
under  the  provisions  of  Section  4  hereof,  the  producer 
will  sell  direct  consumption  sugars  manufactured  by 
him  at  not  more  than  such  price  as  is  found  to  be  just 
and  fair  by  the  United  States  Food  Administrator, 
hereafter  called  the  ''maximum  price."  The  said  United 
States  Food  Administrator  agrees  that  he  will  not  name 
a  price  less  than  thor  basic  price  mentioned  in  Section  2 
hereof  for  sugar  in  barrels  or  one  hundred  pound  bags 
f.  o.  b.  New  Orleans  or  point  of  origin  carrying  the 
same  freight  rate  as  New  Orleans;  provided,  how- 
ever, that  if  domestic  beet  sugar  is  generally  selling 
at  a  higher  price  than  the  basic  price  of  fine  cane  granu- 


EXHIBIT   10  199 

lated  sugar,  the  United  States  Food  Administrator  will 
not  name  a  price  less  than  the  price  of  domestic  beet 
sugar  less  the  differentials  named  in  paragraph  2, 
provided  that  if  there  is  a  sale  to  the  United  States 
or  any  of  its  agencies  such  price  shall  not  necessarily 
govern. 

That  he  will  sell  raw  sugar  at  a  price  delivered  at 
customary  Louisiana  refining  points  not  greater  than 
the  price  which  may  be  found  to  be  just  and  fair  by  the 
United  States  Food  Administrator  and  not  less  than  the 
price  of  duty  paid  96  degree  Cuban  raw  sugar  delivered 
at  such  refilling  points. 

That  he  will  sell  washed  sugar  (which  is  denned  as 
any  first  sugar  above  the  grade  of  raw  sugar,  and  be- 
low the  grade  of  off  yellow  clarified,  and  having  a  color 
test  of  not  less  than  22  Dutch  Standard)  at  a  price 
40  cents  above  the  price  of  raw  sugar  as  determined  by 
the  foregoing  paragraph  and  paragraph  4,  with  an 
addition  of  1/16  of  a  cent  per  pound  for  each  degree 
or  fraction  thereof  above  96  degrees  and  a  deduction  of 
i/io  of  a  cent  per  pound  for  each  degree  or  fraction 
thereof  below  96  degrees. 

(4)  The  producer  further  agrees  that  the  said  Sugar 
Committee   with   the   approval   of   the   United   States 
Food  Administrator  may  name  a  price  for  any  grade 
or  grades  of  Louisiana  sugar  from  time  to  time  at  any 
figure  not  greater  than  the  price  for  such  grade  or  grades 
which  may  be  fixed  as  the  "maximum  price"  therefor 
by  the  United  States  Food  Administration  under  para- 
graph 3   hereof,  and  that  after  the  prices  thus  fixed 
are  posted  at  the  New  Orleans  Sugar  and  Rice  Exchange 
he  will  sell  the  sugar  at  the  price  named  until  changed 
under  the  provisions  of  this  contract. 

(5)  In  the  event  that  the  producer  is  required  by 
the  United  States  Food  Administrator  directly  or  through 
said  Committee  to  ship  sugar  to  a  point  carrying  a  freight 
rate  higher  from  point  of  origin  to  point  of  destination 


200  APPENDIX 

than  that  from  New  Orleans  to  point  of  destination 
the  producer  may  add  to  the  price  prescribed  under 
paragraphs  3  and  4  hereof  the  extra  freight,  provided 
that  the  selling  price  to  the  retailer  shall  not  be  greater 
than  the  maximum  authorized  selling  price  of  similar 
sugars  at  such  point  to  retailers. 

(6)  a.   The  producer  further  agrees  that  he  will  ship 
sugar  at  such  time,  to  such  places,  and  in  such  quantities 
as  may  be  directed  by  the  United  States  Food  Adminis- 
trator through  the  said  Sugar  Committee,  that  he  will 
route  all  sugars  as  directed  by  said  Committee,  and  that 
he  will  promptly  comply  with  all  orders  for  change  of 
destination  and  route  and  for  reconsignment. 

Provided  that  if  no  instructions  or  directions  are 
given  by  the  said  Food  Administrator  or  the  Sugar 
Committee  he  may  continue  to  distribute  his  sugar  in 
the  customary  manner  heretofore  existing  for  the  dis- 
tribution of  such  sugars,  subject  to  the  price  provisions 
of  this  contract. 

Provided,  further,  that  nothing  in  this  contract  shall 
require  the  producer  to  ship  or  dispose  of  his  sugar 
when  prices  lower  than  the  "maximum  price"  named 
under  paragraph  3,  less  the  differentials  stated  in  para- 
graph 2,  are  named  by  the  Sugar  Committee  under 
paragraph  4. 

b.  The  producer,  unless  notified  to  the  contrary,  will 
keep  the  Committee  constantly  informed  of  the  quantity 
and  grade  of  sugar  that  is  being  produced  daily  and  the 
disposition  of  the  same. 

(7)  In  consideration  of  the  foregoing  agreement,  the 
United  States  Food  Administrator  agrees  : 

a.  That  he  will  cause  the  said  Sugar  Committee  to 
direct  the  disposition  of  direct  consumption  sugars  in 
the  most  economical  and   efficient  method  consistent 
with  equitable  distribution  and  the  needs  of  the  country. 

b.  That  he  will  use  his  best  efforts  to  secure  prefer- 
ence in  the  distribution  and  sale  to  local  refiners  of 


EXHIBIT    10  201 

Louisiana  raw  sugars  manufactured  by  the  producer 
herein,  if  the  producer  is  desirous  of  selling  to  such  re- 
finers. 

c.  That  he  will  use  his  best  efforts  with  the  proper 
authorities  to  secure  an  adequate  supply  of  railroad 
cars  for  the  distribution  of  all  Louisiana  sugars,  covered 
by  this  contract. 

(8)  Sugar  shall  be   delivered   to   the  United   States 
Government  for  Army  and  Navy  uses  when  and  in  such 
amount  as  the  Government  may  require  at  prices  to  be 
fixed  by  the  United  States  Food  Administrator. 

(9)  It  is  understood  and  agreed  by  the  producer  that 
a  wilful  violation  of  any  of  the  terms  of  this  agreement 
may  result  in  and  be  cause  for  revocation  of  his  license. 

(10)  This  agreement  shall  remain  in  full  force  and 
effect  from  October  i,   1918,  and  until  the  final  dis- 
position of  the  crop  of  the  season  1918-1919,  and  for 
each  succeeding  year  thereafter  until  the  existing  state 
of  war  between   the  United   States   Government  and 
Germany  shall  have  terminated  and  the  fact  of  such 
termination  shall  have  been  proclaimed  by  the  President 
of  the  United  States ;  provided  that  either  party  hereto 
may  withdraw  from  the  contract  after  the  disposition 
of  the  crop  of  1918-1919,  by  giving  a  thirty  days'  written 
notice  to  that  effect  before  October  i,   1919;  or  may 
withdraw  for  any  subsequent  crop  year  by  giving  such 
notice  on  or  before  October  i,  of  that  year. 

(n)  The  word  "he"  wherever  used  in  this  contract 
to  indicate  the  producer,  shall  refer  to  such  producer 
whether  an  individual,  partnership  or  corporation  as 
the  case  may  be. 

IN  WITNESS  WHEREOF,  the  parties  hereto  have  sub- 
scribed this  agreement  on  the  day  and  year  first  above 
written. 


202  APPENDIX 

EXHIBIT   11 

ASSIGNMENT  TO  THE  ROYAL  COMMISSION  ON  THE 
SUGAR  SUPPLY  BY  THE  UNITED  STATES  SUGAR 
EQUALIZATION  BOARD,  INC.,  OF  ITS  RIGHTS  TO 
ONE-THIRD  OF  THE  SUGAR  PURCHASED  UNDER 
AGREEMENT  AS  TO  CUBAN  SUGARS  CROP  1918- 
1919,  DATED  OCTOBER  TWENTY-FOURTH,  1918. 

WHEREAS,  on  the  24th  day  of  October,  1918,  the  - 
United  States  Sugar  Equalization  Board,  Incorporated, 
entered  into  an  agreement  as  party  of  the  first  part  with 
Carlos  Manuel  de  Cespedes,  Robert  B.  Hawley,  Manuel 
Rionda,  a  Cuban  Commission,  parties  of  the  second  part, 
and  agents  of  various  Cuban  producers  acting  severally 
for  the  producers  of  sugar  in  the  Island  of  Cuba,  parties 
of  the  third  part,  under  and  by  the  terms  of  which  the 
seller  therein  described  agreed  "on  behalf  of  himself 
and  his  principals"  to  sell  and  deliver  to  the  buyer 
(United  States  Sugar  Equalization  Board)  all  the  raw 
sugar  produced  "by  him  or  his  principals  in  the  Island 
of  Cuba  during  the  crop  season  of  1918-1919"  except 
that  actually  used  for  local  consumption  in  Cuba ;  and 
WHEREAS,  by  the  third  paragraph  of  said  agreement 
right  and  power  was  given  to  the  United  States  Equaliza- 
tion Board  to  assign  said  contract  without  recourse  in 
respect  to  any  part  of  the  sugar  contracted  for  therein 
as  follows : 

"The  Buyer  shall  have  the  right  from  time  to  time  to  assign 
this  contract,  without  recourse,  in  respect  to  any  part  of  the  sugar 
contracted  for  herein,  to  the  Governments  of  the  United  Kingdom, 
Canada,  France  or  Italy,  or  to  any  duly  constituted  agency  repre- 
senting all  or  either  of  said  governments,  or  to  any  sugar  refiner 
of  the  United  States.  The  Buyer,  upon  making  any  such  assign- 
ment, shall  give  notice  thereof  to  the  Seller." 

and 

WHEREAS,  the  United  States  Sugar  Equalization 
Board,  Incorporated,  has  this  day  agreed  to  transfer 


EXHIBIT    11  203 

to  The  Royal  Commission  on  the  Sugar  Supply,  an  agency 
duly  authorized  to  act  and  now  acting  in  making  this 
purchase  on  behalf  of  the  Governments  of  Great  Britain 
(not  including  Canada),  France  and  Italy,  without 
recourse,  the  rights  of  the  United  States  Sugar  Equaliza- 
tion Board,  Incorporated,  to  one- third  of  all  of  the  raw 
sugar  purchased  by  the  said  United  States  Sugar  Equali- 
zation Board,  Incorporated,  under  the  agreement  afore- 
said of  October  24,  1918. 

Now,  THEREFORE,  by  this  agreement,  the  United 
States  Sugar  Equalization  Board,  Incorporated,  does 
hereby  assign  to  The  Royal  Commission  on  the  Sugar 
Supply,  without  recourse  upon  the  said  the  United 
States  Sugar  Equalization  Board,  Incorporated,  its 
rights  to  and  to  have  delivered  to  it  one-third  of  all  of 
the  raw  sugars  purchased  by  the  said  United  States 
Sugar  Equalization  Board,  Incorporated  (together  with 
any  commission  upon  such  one-third  of  all  the  raw 
sugars  purchased  by  the  United  States  Sugar  Equaliza- 
tion Board,  Incorporated,  under  said  Agreement  of 
October  24,  1918,  to  which  the  United  States  Sugar 
Equalization  Board,  Incorporated,  would  be  entitled 
under  said  agreement)  under  the  agreement  of  October  24, 
1918,  aforesaid,  at  the  respective  prices  for  delivery 
f.  o.  b.  Northside  and  Southside  Cuban  ports,  and  upon 
the  terms  therein  stated. 

A  condition  of  this  assignment  is  the  right  of  the 
Royal  Commission  on  the  Sugar  Supply  at  its  option 
to  take  321,000  tons,  or  any  part  thereof,  of  the  one- third 
of  the  Cuban  crop  hereby  assigned  for  shipment  to  the 
United  States  for  refining  purposes  on  the  cost  and 
freight  terms  of  Paragraph  2,  Section  2,  of  Page  3  of  the 
Cuban  Contract  dated  October  24,  1918. 

And  the  said  The  Royal  Commission  on  the  Sugar 
Supply  as  to  such  one-third  of  the  raw  sugars  from  Cuba 
as  aforesaid  does  hereby  accept  said  assignment  and  agree 
to  and  does  hereby  assume  as  to  said  one-third  of  the 


204  APPENDIX 

sugars  aforesaid  all  of  the  payments,  duties  and  obli- 
gations of  the  said  United  States  Sugar  Equalization 
Board,  Incorporated,  under  the  agreement  of  October  24, 
1918,  aforesaid. 

Said  agreement  of  October  24,  1918,  is  made  a  part 
hereof. 

WITNESS  the  signature  of  the  United  States  Sugar 
Equalization  Board,  Incorporated,  by  George  M. 
Rolph,  its  President,  and  the  seal  thereof  hereto  affixed 
duly  attached  by  H.  H.  Bundy,  its  Secretary,  and  witness 
the  signature  of  The  Royal  Commission  on  the  Sugar 
Supply  of  the  United  Kingdom  of  Great  Britain  by 
J.  Ramsey  Drake,  this day  of  December,  1918. 


EXHIBIT   12 

OPTION  GIVEN  TO  ROYAL  COMMISSION  ON  THE 
SUGAR  SUPPLY  BY  REFINERS  OF  THE  UNITED 
STATES  FOR  THE  REFINING  OF  321,000  TONS 
CUBAN  RAW  SUGAR 

November  22nd, 1918 

The  Royal  Commission  on  the  Sugar  Supply, 
London, 

England. 
Gentlemen : 

We  are  advised  by  Mr.  George  M.  Rolph,  the  Head 
of  the  Sugar  Division  of  the  United  States  Food  Ad- 
ministration and  President  of  the  United  States  Sugar 
Equalization  Board,  Inc.,  that  you  have  made  arrange- 
ments with  the  latter  Company  for  the  assignment  by 
it  to  you  of  a  portion  of  the  Cuban  Sugar  Crop  for 
1918-19  and  that  such  arrangements  are  made  with  the 
approval  of  the  Food  Administration.  We  also  under- 
stand that  with  the  approval  of  the  Food  Administration 
and  with  a  view  to  securing  a  supply  of  refined  sugar  for 
distribution  to  the  United  Kingdom,  France  and  Italy 


EXHIBIT    12  205 

you  are  considering  the  advisability  of  having  a  part  of 
your  purchase  refined  in  the  United  States. 

At  the  present  writing,  we  are  negotiating  with  the 
United  States  Sugar  Equalization  Board  looking  toward 
the  purchase  of  our  requirements  of  raw  sugar  for  the 
period  up  to  December  31,  1919,  and  the  sale  of  the 
same  at  an  agreed  margin. 

Accordingly,  therefore,  in  consideration  of  the  margin 
to  be  paid  to  us  as  hereinafter  set  forth  we,  Sugar  Re- 
finers of  the  United  States,  at  the  request  of  the  United 
States  Sugar  Equalization  Board,  Incorporated,  severally 
agree  to  give  and  do  hereby  give  to  your  Commission 
the  option  of  having  refined  in  our  refining  plants  during 
the  year  1919  up  to  321,000  tons  of  Cuban  Raw  Sugar 
of  the  Crop  of  1918-19  to  produce  an  equivalent  quantity 
up  to  300,000  tons  of  refined  sugar,  upon  the  following 
terms  and  conditions : 

Quantity  and  Option :  —  300,000  tons  of  refined  granu- 
lated sugar  at  the  rate  of  27,275  tons  monthly  beginning 
February  ist,  1919,  and  if  option  for  any  month  is  not 
exercised,  the  total  quantity  is  automatically  reduced 
by  the  amount  so  not  taken  in  any  month. 

Declaration  of  Option :  —  By  Sixty  Days'  written  or 
cable  notice  to  the  American  Refiners'  Committee 
previous  to  first  day  of  month  in  which  refined  is  to  be 
delivered  except  for  deliveries  during  February,  1919, 
for  which  the  declaration  of  the  option  must  be  made 
before  January  ist,  1919. 

Delivery  of  Raws:  —  That  to  the  extent  that  the 
Royal  Commission  on  the  Sugar  Supply  exercises  its 
option  to  take  American  refined  sugar,  an  equivalent 
quantity  of  Cuban  raws  shall  be  transferred  by  the 
Royal  Commission  on  the  Sugar  Supply  to  the  American 
Refiners  through  the  American  Refiners'  Committee  on 
the  basis  of  Paragraph  2,  Section  2,  of  Page  3  of  the 
Cuban  Contract  dated  October  24,  1918. 

Selling  Price  of  Refined :  —  The  price  of  refined  sugar 


206  APPENDIX 

delivered  in  customary  packages,  will  be  the  c.  &  f .  price 
of  the  raw  sugar  delivered  at  refinery,  plus  insurance, 
duty  and  the  refiners'  margin  in  effect  for  domestic 
business  as  approved  by  the  United  States  Sugar  Equali- 
zation Board,  Inc.,  at  the  date  of  shipment,  less  a  draw- 
back allowance  of  i^  per  pound,  said  drawback  allow- 
ance and  price  subject  to  any  change  in  United  States 
Custom  Laws  or  in  the  event  of  an  export,  or  excise  tax 
or  any  government  action  which  would  alter  the  re- 
finers' margin  herein  agreed  upon,  as  more  particularly 
stated  in  printed  form  of  Refined  Sugar  Export  Con- 
tract attached. 

Tonnage:  —  Tonnage  to  load  refined  shall  be  furnished 
promptly  by  you  and  within  the  period  for  delivery  of 
refined  referred  to  in  any  notice  of  your  availing  your- 
selves of  any  part  of  the  option  herein  given.  If  tonnage 
is  not  so  provided  you  shall  compensate  us  for  interest, 
insurance  and  storage,  or  at  our  option  we  shall  have  the 
privilege  of  sending  the  sugar  to  store  for  account,  ex- 
pense and  risk  of  the  Royal  Commission  on  the  Sugar 
Supply. 

Shipment  to  be  made  subject  to  terms  of  refined 
sugar  export  contract,  a  copy  of  which  is  hereto  annexed 
and  marked  Schedule  A. 

Releases  from  Responsibility:  —  Both  your  Commission 
and  ourselves  shall  be  relieved  from  any  liability  here- 
under  if  prevented  from  carrying  out  our  obligations,  by 
Acts  of  God  or  from  causes  beyond  our  control. 

Ports  of  Shipment :  —  You  shall  take  the  refined  sugar 
at  any  of  the  following  ports  as  may  be  directed  by  us : 
Boston,  New  York,  Philadelphia, 
Savannah,  New  Orleans. 

We  hereby  severally  accept  and  agree  to  be  bound 
by  the  foregoing  option  for  our  pro  rata  portion  of  said 
option  as  set  forth  in  the  percentage  named.  If  the 
percentages  named  do  not  total  100%  we  agree  that  the 
percentages  for  the  refiners  signing  this  option  shall  be 


EXHIBIT    12  207 

raised  pro  rata  to  make  this  option  good  for  100%  de- 
livery. 


THE  AMERICAN   SUGAR  REFINING 

COMPANY  38.001 


By. 


THE   NATIONAL    SUGAR    REFINING    CO. 
OF  NEW  JERSEY  11.94 

By 

ARBUCKLE  BROTHERS  6.613 

By.... 

WARNER  SUGAR  REFINING  COMPANY     6.187 

By 

COLONIAL  SUGARS  COMPANY  2.185 

By 

FEDERAL   SUGAR  REFINING   COMPANY   8.645 

By 

WM.  HENDERSON  1.220 

By.. 


THE    W.    J.    McCAHAN     SUGAR    REFIN- 
ING COMPANY  2.489 


By 

PENNSYLVANIA  SUGAR   COMPANY  4.537 

By 

REVERE  SUGAR  REFINERY  2.985 

By.. 


208  APPENDIX 

SAVANNAH  SUGAR  REFINING  CORPO- 
RATION 2.149 

By : 

LEON  GODCHAUX  COMPANY                        1433 
By 

REFINED   SUGAR  EXPORT   CONTRACT  WITH  THE 
ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY 

THE 

SUGAR  REFINING  COMPANY  has  sold,  and  the  ROYAL 
COMMISSION  ON  THE  SUGAR  SUPPLY,  London,  England, 
has  purchased  bags  of 

One  Hundred  (100)  pounds  each,  of  Fine  Granulated 
Sugar,  packed  in  regular  one  hundred  pound  bags  at 

cents  per  pound,  net 

cash,  f.  o.  b.  steamer,  stevedoring  to  be  borne  by  ship. 
This  price  is  subject  to  any  change  in  export  price  that 
may  be  ruling  on  date  of  shipment. 

Invoice  payable  in  New   York  on  presentation  of 
shipping  documents ;  drawback  payable  to  the 
SUGAR  REFINING  COMPANY. 

THE  ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY  agrees 
to  pay  to  the  SUGAR  REFIN- 

ING COMPANY  the  sum  of  One  Dollar  ($1.00)  for  each 
Custom  House  entry  which  may  be  necessary  on  this 
contract. 

Delivery  to  commence 

AT 

DELIVERIES  :  THE  ROYAL  COMMISSION  ON  THE  SUGAR 
SUPPLY  agrees  that  on  lots  of  2,500  tons  or  more  the 
steamer  will  load  at  the  wharf  designated  by  refinery 
provided  steamer  can  always  safely  load  afloat. 

THE  ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY 
further  agrees  that  steamer  will  load  at  two  (2)  refineries 
provided  that  quantities  of  not  less  than  2,500  tons  are 
loaded  at  each  refinery  and  provided  that  steamer  can 


EXHIBIT   12  20Q 

always  safely  load  afloat.  Expense  of  moving  to  be  for 
account  of  vessel.  Time  lost  in  moving  to  be  for  account 
of  sellers,  provided  steamer  is  moved  promptly  after 
loading  is  completed  at  the  first  berth.  In  case  de- 
murrage is  incurred,  the  time  lost  in  moving  shall  be 
for  account  of  each  seller  in  the  proportion  that  his  part 
of  the  cargo  bears  to  the  whole.  If,  through  the  dis- 
ability of  the  wharf .  designated  by  the  Refinery,  it 'is 
impossible  to  safely  berth  steamer,  then  the  Refinery 
must  deliver  the  cargo  to  a  loading  berth  appointed  by 
steamer,  within  lighterage  limits  of  the  loading  port, 
in  which  case  all  lightering  expense  to  be  for  Refinery 
account. 

If  the  Refinery  is  able  to  load  steamer,  subject  to 
foregoing  provisions,  but  the  steamer  elects  for  its  own 
convenience  not  to  go  to  the  wharf  designated  by  the 
Refinery,  but  to  load  at  its  own  pier,  then  the  lighterage 
expenses  at  cost  shall  be  for  buyer's  account. 

THE  ROYAL  COMMISSION  ON  THE  SUGAR  SUPPLY 
agrees  to  give  the  seller  at  least  seven  (7)  days'  notice 
of  approximate  date  of  arrival  of  vessel,  whenever 
possible.  In  the  event  of  not  receiving  notice  the 
refinery  shall  not  be  held  for  damages,  but  will  make  all 
possible  effort  to  furnish  the  sugars  required. 

DATE  OF  DELIVERY:  Delivery  on  full  cargo  lots  to 
be  made  at  minimum  rate  of  1,000  tons  of  2,240  pounds 
per  weather  working  day,  Sundays  and  holidays  ex- 
cepted.  Any  demurrage  incurred  to  be  charged  for  at 
forty-eight  cents  (48  c)  per  gross  registered  ton  of  steamer 
per  day. 

Steamer's  lay-days  to  count  from  the  time  the  steamer 
is  in  berth  ready  to  load.  Any  time  lost  by  steamer 
through  berth  being  occupied  on  arrival  thereat  or 
through  awaiting  shippers'  instructions  after  steamer 
reports  within  the  customary  working  hours  of  the  port 
ready  for  cargo,  to  be  for  seller's  account. 

PART  CARGOES  :  Part  cargoes,  that  is,  lots  of  less  than 


210  APPENDIX 

2,500  tons  delivered  by  one  refinery,  may  be  delivered 
to  steamer  at  its  own  wharf  or  at  the  Refinery  wharf 
where  the  steamer  is  receiving  the  minimum  quantity 
of  2,500  tons,  at  the  option  of  the  refineries. 

DELIVERY  BY  LIGHTER:  The  steamer  to  have  three 
weather  working  days,  Sundays  and  holidays  excepted, 
free  for  discharge  of  lighters.  Time  to  count  from  the 
time  the  lighter  captain  gives  written  notice  to  the  clerk 
of  the  steamer  of  lighter's  arrival  alongside.  As  far  as 
possible,  the  buyer  is  to  give  the  seller  at  least  seven 
days'  notice  of  the  approximate  arrival  of  all  vessels. 
In  case  of  delay  of  vessels,  demurrage  on  lighters,  if 
incurred,  shall  begin  five  days  from  date  on  which  buyer 
advises  seller  that  vessel  will  receive  cargo. 

No  demurrage  will  be  charged  by  steamer  in  case  the 
steamer  has  alongside  sugar  from  one  or  more  refineries 
sufficient  to  load  1,000  tons  of  2,240  pounds  per  day. 

Any  lighterage  expense  resulting  from  steamer's 
failure  to  take  delivery  of  full  quantity  ordered,  to  be 
for  buyer's  account. 

The  demurrage  on  lighters  to  be  charged  to  buyers 
at  cost,  but  claims  must  be  presented  in  accordance  with 
custom  of  the  port. 

In  consideration  of 

passing  the  Custom  House  entry  and 
carrying  the  drawback,  the  Royal  Commission  on  the 
Sugar  Supply  hereby  agrees  to  furnish  Custom  House 
bill  of  lading  and  landing  certificate  free  of  charge,  these 
to  be  delivered  promptly  to  the  Custom  House  Depart- 
ment of 

Any  necessary  consular  certificates  or  expense  for 
viseing  any  documents  to  be  for  buyer's  account. 

If  is 

unable  to  collect  the  drawback  through  any  neglect  on 
buyer's  part  to  fulfill  the  foregoing  agreement,  buyer 
agrees  to  reimburse  it  promptly  in  full  for  the  amount 
of  said  drawback. 


EXHIBIT   13  211 

This  sale  is  based  on  present  rate  of  duty,  and  present 
laws  as  to  drawback.  If  seller  is  unable,  by  reason 
of  legislation,  to  collect  the  full  amount  of  duty  paid  on 
any  of  the  sugar  delivered  under  this  Contract  by  way 
of  drawback,  the  buyer  agrees  to  pay  the  seller,  in  ad- 
dition to  the  contract  price,  an  amount  equal  to  such 
duty  which  seller  is  unable  to  collect. 

All  additional  duties,  excises  or  other  taxes  hereafter 
levied  or  assessed  on  the  raw  or  refined  sugar  necessary 
to  fill  this  contract  to  be  at  buyer's  expense  in  addition 
to  the  price  specified. 

The  seller  will  not  be  responsible  for  any  delivery 
under  this  contract,  if  prevented  or  delayed  by  war 
conditions,  strikes,  labor  difficulties,  accidents,  embargo, 
fire  or  any  other  cause  beyond  its  control,  or  if  seller's 
supply  of  raw  material  shall  be  interrupted  by  any  such 
cause.  In  such  case,  the  obligation  to  deliver  under 
this  contract  is  cancelled  to  such  an  extent  as  deliveries 
shall  be  prevented  or  interrupted  thereby  and  no  liability 
shall  be  imposed  upon  the  seller  for  damages  resulting 
therefrom. 

The  sale  is  made  subject  to  the  seller's  ability  to  se- 
cure an  export  permit  if  such  permit  is  required. 

Brokerage  of  three  (3)  cents  per  one  hundred  pounds 
to  be  paid. 

EXHIBIT  13 

LETTER  CONFIRMING  INCREASE  FROM  321,000  TONS 
TO   535,000  TONS. 

April  30,  1919 

Royal  Commission  on  the  Sugar  Supply 
London 

England 
Gentlemen : 

Referring  to  letter  of  February  27  from  your  Repre- 
sentative, Mr.  J.  R.  Bruce,  wherein  you  requested  The 


212  APPENDIX 

American  Refiners'  Committee  to  increase  the  tonnage 
of  refined  sugar  under  the  Option  of  November  22,  1918, 
from  300,000  to  400,000  tons  and  to  his  letter  of  April  17, 
wherein  you  requested  a  further  increase  of  the  tonnage 
of  refined  sugar  in  the  said  Option  Agreement  to  a  total 
of  500,000  tons  of  refined  sugar,  we  hereby  confirm  the 
increase  in  the  quantity  of  refined  sugar  that  may  be 
called  for  from  300,000  to  500,000  tons,  upon  the  terms 
and  in  accordance  with  the  conditions  of  the  said  Con- 
tract of  November  22,  1918. 

And,  we  hereby  severally  accept  and  agree  to  be  bound 
by  the  foregoing  option  for  our  pro  rata  portion  of  said 
option  as  set  forth  in  the  percentage  set  opposite  our 
names.  If  the  percentages  named  do  not  total  100% 
we  agree  that  the  percentages  for  the  Refiners  signing 
this  Option  shall  be  raised  pro  rata  to  make  this  Option 
good  for  100%  delivery. 


THE     AMERICAN     SUGAR     REFINING 

COMPANY  38.001 


By. 


THE  NATIONAL  SUGAR  REFINING  CO., 

OF  NEW  JERSEY  11.94 


By 

ARBUCKLE  BROTHERS  6.613 

By 

WARNER  SUGAR  REFINING  COMPANY     6.187 

By 

COLONIAL  SUGARS  COMPANY  2.185 

By.. 


Approved: 


EXHIBIT  13  213 

FEDERAL  SUGAR  REFINING  COMPANY  8.645 

By .' 

WM.  HENDERSON  1.220 

By 

THE  W.  J.  McCAHAN  SUGAR  REFINING 

COMPANY  2.489 

By 

PENNSYLVANIA  SUGAR  COMPANY              4.537 
By 

REVERE   SUGAR  REFINERY  2.985 

By : 

SAVANNAH  SUGAR  REFINING  CORPO- 
RATION 2.149 

By 

LEON  GODCHAUX  COMPANY                         1.443 
By 


UNITED  STATES  SUGAR  EQUALIZATION    BOARD 
INC. 


By. 


CERTIFICATE    OF    INCORPORATION,    BY- 
LAWS AND  PRESIDENT  WILSON'S  LETTER 
OF   AUTHORIZATION  TO   INCORPORATE 


EXHIBIT  14 

CERTIFICATE  OF  INCORPORATION  OF  UNITED 
STATES  SUGAR  EQUALIZATION  BOARD,  INCOR- 
PORATED 

First.  The  name  of  this  corporation  is  UNITED 
STATES  SUGAR  EQUALIZATION  BOARD,  INCORPORATED. 

Second.  The  location  of  its  principal  office  in  the 
State  of  Delaware  is  in  the  City  of  Wilmington,  County 


2l6  APPENDIX 

of  New  Castle.  The  name  of  the  resident  agent  therein 
and  in  charge  thereof  is  the  Delaware  Charter  Company. 
The  street  and  number  of  said  principal  office  and  the 
address  by  street  and  number  of  said  resident  agent  is 
900-904  Market  Street. 

Third.  The  objects  and  purposes  for  which  and  for 
any  of  which  this  corporation  is  formed  are,  to  do  any 
or  all  "of  the  things  herein  set  forth  to  the  same  extent 
as  natural  persons  might  or  could  do,  viz. :  To  purchase, 
or  otherwise  acquire,  manufacture,  sell  or  otherwise 
dispose  of,  store,  handle  and  otherwise  deal  in  and  with 
raw  and  refined  cane  and  beet  sugar,  syrups,  molasses 
and  other  commodities,  and  to  do  all  acts  and  things 
necessary,  expedient  or  incidental  to  the  efficient  con- 
duct of  said  business,  within  or  without  the  State  of 
Delaware. 

To  exercise  all  powers  which  may  be  delegated  to  it 
by  the  President  of  the  United  States. 

The  foregoing  clauses  shall  be  construed  both  as  ob- 
jects and  powers;  and  it  is  hereby  expressly  provided 
that  the  foregoing  enumeration  of  specific  powers  shall 
not  be  held  to  limit  or  restrict  in  any  manner  the  powers 
of  this  corporation. 

In  general,  to  have  and  to  exercise  all  the  powers 
conferred  by  the  laws  of  Delaware  upon  corporations 
formed  under  the  Act  hereinafter  referred  to. 

Fourth.  The  total  authorized  capital  stock  of  this 
corporation  is  Five  Million  Dollars  ($5,000,000)  divided 
into  Fifty  Thousand  (50,000)  shares  of  One  Hundred 
Dollars  ($100)  each. 

The  amount  of  capital  stock  with  which  this  corpora- 
tion will  commence  business  is  the  sum  of  One  Thousand 
Dollars  ($1,000),  being  ten  (10)  shares  of  One  Hundred 
Dollars  ($100)  each. 

Fifth.  The  names  and  places  of  residence  of  each  of 
the  original  subscribers  to  the  capital  stock  and  the 
number  of  shares  subscribed  for  by  each  are  as  follows : 


EXHIBIT   14  217 

NAME  RESIDENCE  NUMBER  OF  SHAKES 

George  M.  Rolph      .     .    San  Francisco,  Cal.  ^k, 

Theodore  F.  Whitmarsh    New  York,  N.  Y.  3- 

George  A.  Zabriskie  .     .    New  York,  N.  Y.  3 

Sixth.  This  corporation  is  not  to  have  perpetual 
existence.  Its  existence  is  to  commence  on  the  Fif- 
teenth day  of  July,  1918,  and  is  to  cease  on  the  Four- 
teenth day  of  July,  1923,  unless  it  is  sooner  dissolved 
in  the  manner  provided  by  law. 

Seventh.  The  property  of  the  stockholders  shall  not 
be  subject  to  the  payment  of  corporate  debts  to  any 
extent  whatever. 

Eighth.  The  directors  of  this  corporation  shall  hold 
office  for  one  year  from  the  date  of  their  election  and 
until  their  successors  are  elected  and  qualified  unless 
sooner  removed.  The  holder  or  holders  of  two-thirds 
of  the  outstanding  capital  stock  may  call  a  special 
meeting  of  stockholders  at  any  time,  upon  mailing 
notice  to  the  other  stockholders  of  the  tune  and  place  of 
said  meeting,  three  days  prior  to  said  appointed  time, 
which  notice  may  be  waived  by  unanimous  consent,  or 
by  the  presence  of  all  stockholders  at  said  special  meet- 
ing; and  the  stockholders  present  may  by  a  majority 
vote  remove  any  director  or  directors  from  office  and 
elect  a  successor  or  successors  to  hold  office  for  the  re- 
mainder of  the  unexpired  term. 

In  furtherance,  and  not  in  limitation,  of  the  powers 
conferred  by  statute,  the  board  of  directors  are  expressly 
authorized  to  make,  alter,  amend,  and  rescind  the  by- 
laws of  this  corporation,  and  to  authorize  and  cause  to 
be  executed  mortgages  and  liens  upon  the  personal 
property  of  this  corporation,  and  to  authorize  the  bor- 
rowing of  such  sums  of  money  from  time  to  time,  and 
the  making  and  execution  of  such  notes,  mortgages, 
pledges  and  liens  on  the  personal  property  of  this  corpo- 
ration, as  they  may  deem  advisable. 


2l8  APPENDIX 

This  corporation  reserves  the  right  to  amend,  alter, 
change  or  repeal  any  provision  contained  in  this  Certif- 
icate of  Incorporation,  in  the  manner  now  or  hereafter 
prescribed  by  statute,  and  all  rights  conferred  on  stock- 
holders herein  are  granted  subject  to  this  reservation. 

WE,  THE  UNDERSIGNED,  being  each  of  the  original 
subscribers  to  the  capital  stock  hereinbefore  named  for 
the  purpose  of  forming  a  corporation  to  do  business 
both  within  and  without  the  State  of  Delaware,  and 
in  pursuance  of  any  Act  of  the  Legislature  of  the  State 
of  Delaware  entitled,  "An  Act  Providing  a  General 
Corporation  Law"  (approved  March  loth,  1899),  and 
the  acts  amendatory  thereof  and  supplemental  thereto, 
do  make  and  file  this  Certificate,  hereby  declaring 
and  certifying  that  the  facts  herein  stated  are  true,  and 
do  respectively  agree  to  take  the  number  of  shares  of 
stock  hereinbefore  set  forth,  and  accordingly  have  here- 
unto set  our  hands  and  seals  this day  of  July, 

1918. 

(SEAL) 

In  presence  of 

— (SEAL) 

'— (SEAL) 

United  States  of  America 
District  of  Columbia 

BE  IT  REMEMBERED  that  this 

,    1918,  personally  came  before 

me  a  Notary  Public  for  the  District  of  Columbia,  parties 
to  the  foregoing  Certificate  of  Incorporation,  known  to 
me  personally  to  be  such,  and  severally  acknowledge 
the  said  Certificate  to  be  the  act  and  deed  of  the  signers 
respectively  and  that  the  facts  therein  stated  are  truly 
set  forth. 

Given  under  my  hand  and  seal  of  office  the  day  and 
year  aforesaid. 

/NOTARIAL  \ 

\SEAL        )  Notary  Public,  D.  C. 


EXHIBIT   15  219 

EXHIBIT  15 

UNITED   STATES   SUGAR  EQUALIZATION  BOARD, 
INCORPORATED 

BY-LAWS 
OFFICES 

1.  The  principal  office  shall  be  in  the  City  of  Wil- 
mington,  County  of  New  Castle,  State  of  Delaware, 
and  the  name  of  the  agent  in  charge  thereof  shall  be  the 
Delaware  Charter  Company. 

The  corporation  may  also  have  an  office  in  the  City 
of  Washington,  District  of  Columbia,  and  also  offices 
at  such  other  places  as  the  board  of  directors  may  from 
time  to  time  appoint  or  the  business  of  the  corporation 
may  require. 

SEAL 

2.  The  corporate  seal  shall  have  inscribed  thereon 
the  name  of  the  corporation,  the  year  of  its  organization 
and  the  words  "Corporate  Seal,  Delaware." 

STOCKHOLDERS'  MEETINGS 

3.  All  meetings  of  the  stockholders  shall  be  held  at 
the  office  of  the  corporation  in  the  city  of  Washington, 
District  of  Columbia. 

4.  The   annual   meeting   of   stockholders,    after   the 
year  1918,  shall  be  held  on  the  first  Monday  of  June  in 
each  year,  at  n  o'clock  A.M.     The  fiscal  year  of  the 
corporation  shall  be  coincident  with  the  calendar  year. 

5.  The  holders  of  a  majority  of  the  stock  issued  and 
outstanding,  present  in  person,  or  represented  by  proxy 
shall  be  requisite  and  shall  constitute  a  quorum  at  all 
meetings  of  the  stockholders  for  the  transaction  of  busi- 
ness except  as  otherwise  provided  by  law,  by  the  certif- 


220  APPENDIX 

icate  of  incorporation,  or  by  these  by-laws.  If,  however, 
such  majority  shall  not  be  present  or  represented  at 
any  meeting  of  the  stockholders,  the  stockholders 
present  in  person,  or  by  proxy,  shall  have  power  to  ad- 
journ the  meeting  from  time  to  time,  without  notice 
other  than  announcement  at  the  meeting,  until  the 
requisite  amount  of  stock  shall  be  present.  At  such 
adjourned  meeting  at  which  the  requisite  amount  of 
stock  shall  be  represented  any  business  may  be  trans- 
acted which  might  have  been  transacted  at  the  meeting 
as  originally  notified. 

6.  No  share  of  stock  shall  be  voted  on  at  any  election 
which  has  been  transferred  on  the  books  of  the  corpora- 
tion within  twenty  days  next  preceding  such  election. 
The  vote  for  directors,  and,  upon  the  demand  of  any 
stockholder,   the  vote  upon  any   question  before   the 
meeting,  shall  be  by  ballot.     All  elections  shall  be  had 
and  all  questions  decided  by  a  plurality  vote. 

7.  Written  notice  of  the  annual  meeting  shall  be 
mailed  to  each  stockholder  at  such  address  as  appears  on 
the  stock  book  of  the  corporation,  at  least  ten  days 
prior  to  the  meeting. 

8.  Special    meetings    of    the    stockholders    may    be 
called  by  the  President,  or  by  the  holder  or  holders  of 
two-thirds  of  the  outstanding  capital  stock  at  any  time 
upon  mailing  notice  to  the  other  stockholders  of  the 
time  and  place  of  said  meeting  three  days  prior  to  said 
appointed  time,  which  notice  may  be  waived  by  unani- 
mous consent  or  by  the  presence  of  all  stockholders  at 
said  special  meeting.    Any  business  may  be  transacted 
at  said  meeting. 

DIRECTORS 

9.  The   property   and   business   of   the   corporation 
shall  be  managed  by  its  Board  of  Directors,  seven  (7)  in 
number.    They  shall  be  elected  by  the  stockholders  at 


EXHIBIT   15  221 

the  annual  meeting  of  stockholders  of  the  corporation, 
and  each  director  shall  be  elected  to  service  for  the  term 
of  one  year  and  until  his  successor  shall  Be  ejected  and 
shall  qualify,  unless  sooner  removed.  The  stockholders 
shall  have  the  right  to  remove  any  director  from  office 
in  the  manner  provided  in  the  certificate  of  incorporation. 

10.  The  directors  may  hold  their  meetings  and  have 
one  or  more  offices,  and  keep  the  books  of  the  corpora- 
tion, except  the  original  or  duplicate  stock  ledger,  out- 
side of  Delaware,  at  the  office  of  the  Corporation  in  the 
City  of  Washington,  or  at  such  other  places  as  they  may 
from  time  to  time  determine. 

11.  In  addition  to   the  powers  and  authorities  by 
these  by-laws  and  the  certificate  of  incorporation  ex- 
pressly conferred  upon  them  the  board  may  exercise 
all  such  powers  of  the  corporation  and  do  all  such  lawful 
acts  and  things  as  are  not  by  statute  or  by  the  certif- 
icate of  incorporation  or  by  these  by-laws  directed  or 
required  to  be  exercised  or  done  by  the  stockholders. 

MEETINGS  OF  THE  BOARD 

12.  The  newly  elected  board  may  meet  at  such  place 
and  time  as  shall  be  fixed  by  the  vote  of  the  stockholders 
at  the  annual  meeting,  for  the  purpose  of  organization 
and  otherwise,  and  no  notice  of  such  meeting  shall  be 
necessary  to  the  newly  elected  directors  in  order  to 
legally  constitute  the  meeting :   Provided  a  majority  of 
the  whole  board  shall  be  present ;  or  such  place  and  time 
may  be  fixed  by  the  consent  in  writing  of  all  the  di- 
rectors. 

13.  Regular   meetings   of   the   board   may   be   held 
without  notice  at  such  time  and  place  as  shall  from  time 
to  time  be  determined  by  the  board. 

14.  At  all  meetings  of  the  board  a  majority  of  the 
directors  shall  be  necessary  and  sufficient  to  constitute 
a  quorum  for  the  transaction  of  business. 


222  APPENDIX 

15.  Special  meetings  of  the  board  may  be  called  by 
the  President  on  two  days'  notice  to  each  director, 
either  personally  or  by  mail  or  by  telegram;    special 
meetings  shall  be  called  by  the  President  or  Secretary 
in  like  manner  and  on  like  notice  on  the  written  request 
of  two  directors. 

1 6.  Directors   shall   not   receive   any   compensation 
for  their  services  as  directors  or  members  of  committees. 

17.  The  officers  of  the  corporation  shall  be  a  chair- 
man of  the  board,  a  president,  one  or  more  vice-presi- 
dents, a  secretary,  a  treasurer  and  a  general  counsel. 
Any  two  of  the  aforesaid  offices,  except  those  of  presi- 
dent and   vice-president,   may    be  filled  by    the  same 
person. 

1 8.  The  board  of  directors,  at  its  first  meeting  after 
each  annual  meeting  of  stockholders,   shall   elect  by 
ballot  a  chairman  of  the  board  and  a  president  from  their 
own    number,    and    the    board    shall    also    annually 
choose  one  vice-president,  and  as  many  second  vice- 
presidents  as  it  sees  fit,  a  secretary,  a  treasurer,  and  a 
general  counsel,  who  need  not   be   members   of    the 
board. 

19.  The  board  may  appoint  such  other  officers  and 
agents  as  it  shall  deem  necessary,  who  shall  have  such 
authority  and  shall  perform  such  duties  as  from  time 
to  time  shall  be  prescribed  by  the  board. 

20.  The  officers  of  the  corporation  shall  hold  office 
for  one  year  and  until  their  successors  are  chosen  and 
qualify  in  their  stead.     Any  officer  elected  or  appointed 
by  the  board  of  directors  may  be  removed  at  any  time 
by  the  affirmative  vote  of  a  majority  of  the  whole  board 
of  directors.     No  officer  of  the  corporation  should  be 
entitled  to  any  compensation  for  services  rendered  to 
the  corporation  unless  such  compensation  shall  have 
been  fixed  by  resolution  of  the  board  of  directors  or  of 
the  executive  committee. 


EXHIBIT   15  223 

EXECUTIVE  COMMITTEE 

21.  There  may  be  an  executive  committee  of  three 
(3)  directors  appointed  by  the  board  ,"who  may  meet 
at  stated  times  or  on  notice  to  all  by  any  of  their  own 
number.     The  board  may  delegate  to  such  committee 
authority  to  exercise  any  or  all  the  powers  of  the  board, 
excepting  power  to  amend  the  by-laws,  while  the  board 
is  not  in  session.     Vacancies  in  the  membership  of  the 
committee  shall  be  filled  by  the  Board  of  Directors,  at  a 
regular  meeting  or  at  a  special  meeting  called  for  that 
purpose. 

22.  The    executive    committee    shall    keep    regular 
minutes  of  its  proceedings  and  report  the  same  to  the 
board  when  required. 

23.  The  officers  of  the  company  shall  have  such  powers 
and  duties  as  generally  pertain  to  their  offices  respect- 
ively, as  well  as  such  powers  and  duties  as  shall  from 
time  to  tune  be  conferred  upon  them  by  the  Board  of 
Directors  or  the  Executive  Committee. 

24.  The  treasurer  shall  give  the  corporation  a  bond 
in  a  sum  to  be  fixed  by  the  Board  of  Directors,  and  with 
one  or  more  sureties  satisfactory  to  the  board,  for  the 
faithful  performance  of  the  duties  of  his  office,  and  for 
the  restoration  to  the  corporation,  in  case  of  his  death, 
resignation,  retirement  or  removal  from  office,  of  all 
books,    papers,  vouchers,    money   and   other   property 
of  whatever  kind  in  his  possession  or  under  his  control 
belonging  to  the  corporation. 

VACANCIES 

25.  If  the  office  of  any  director,  or  of  the  president, 
vice-president,  secretary  or  treasurer  or  other  officer  or 
agent,  one  or  more,  becomes  vacant  by  reason  of  death, 
resignation,  retirement,  disqualification,  removal  from 
office,  or  otherwise,  the  directors  then  in  office,  although 
less  than  a  quorum,  by  a  majority  vote,  may  choose  a 


224  APPENDIX 

successor  or  successors,  who  shall  hold  office  for  the 
unexpired  term  in  respect  of  which  such  vacancy  oc- 
curred, except  as  otherwise  provided  in  the  certificate  of 
incorporation  and  these  by-laws. 

DUTIES  OF  OFFICERS  MAY  BE  DELEGATED 

26.  In  case  of  the  absence  of  any  officer  of  the  corpora- 
tion, or  for  any  other  reason  that  the  board  may  deem 
sufficient,  the  board  may  delegate  the  powers  or  duties 
of  such  officer  to  any  other  officer,  or  to  any  director, 
for  the  time  being,  PROVIDED  a  majority  of  the  entire 
board  concur  therein. 

CERTIFICATE  OF  STOCK 

27.  The  certificates  of  stock  of  the  corporation  shall 
be  numbered  and  shall  be  entered  in  the  books  of  the 
corporation  as  they  are  issued.     They  shall  exhibit  the 
holder's  name,  and  the  number  of  shares  and  shall  be 
signed  by  the  president  or  vice-president,  and  secretary 
or  assistant  secretary,  treasurer,  or  assistant  treasurer, 
and  shall  bear  the  corporate  seal. 

TRANSFERS  OF  STOCK 

28.  Transfers  of  stock  shall  be  made  on  the  books  of 
the  corporation  only  by  the  person  named  in  the  certif- 
icate or  by  attorney,  lawfully  constituted  in  writing, 
and  upon  the  surrender  of  such  certificate. 

DIRECTORS'  ANNUAL  STATEMENT 

29.  The   board   of   directors   shall   present   at   each 
annual  meeting,  and  when  called  for  by  the  stockholders, 
at  any  special  meeting  of  the  stockholders,  a  full  and 
clear  statement  of  the  business  and  condition  of  the 
corporation. 


EXHIBIT   16  225 

NOTICES 

30.  Whenever  under  the  provisions  of  these  by-laws 
notice  is  required  to  be  given  to  any  director,  officer  or 
stockholder,  it  shall  not  be  construed  to  mean  personal 
notice,  but  such  notice  may  be  given  in  writing  by 
depositing  the  same  in  the  post-office  or  letter  box,  in  a 
postpaid  sealed  wrapper,  addressed  to  such  stockholder, 
officer  or  director  at  such  address  as  appears  on  the 
books  of  the  corporation,  or,  in  default  of  other  address, 
to  such  director,  officer  or  stockholder  at  the  general 
post-office  in  the  city  of  Wilmington,  Delaware,  and  such 
notice  shall  be  deemed  to  be  given  at  the  time  when  the 
same  shall  thus  be  mailed. 

Any  stockholder,  director  or  officer  may  waive  any 
notice  required  to  be  given  under  these  by-laws. 

AMENDMENTS 

31.  The  stockholders,  by  the  affirmative  vote  of  a 
majority  of  the  stock  issued  and  outstanding,  may  at 
any  regular,  or  at  any  special  meeting,  alter  or  amend 
these  by-laws. 

32.  The  board  of  directors  by  the  affirmative  note 
of  a  majority  of  its  members  may  alter  or  amend  these 
by-laws  at  a  regular  or  special  meeting  of  the  board, 
provided  that  the  amendment  shall  have  been  proposed 
at  a  meeting  of  the  board  at  least  three  days  prior  to 
said  meeting. 

EXHIBIT   16 

LETTER  AUTHORIZING  THE  FORMATION  OF  THE 
UNITED  STATES  SUGAR  EQUALIZATION  BOARD, 
INC.,  JULY  8,  1918 

Hon.  Herbert  Hoover, 

United  States  Food  Administrator : 
I  hereby  authorize  and  direct  you  to  proceed  with 
the  formation  of  a  corporation  to  be  known  as  the  United 
Q 


226  APPENDIX 

States  Sugar  Equalization  Board,  Incorporated,  with 
general  powers  and  character  set  out  in  the  certificate 
of  incorporation  which  you  have  submitted  to  me.  I 
approve  of  the  appointment  of  the  following  persons 
as  directors  of  such  corporation  : 

Herbert  Hoover  of  Washington,  D.  C. 

George  M.  Rolph  of  San  Francisco,  California. 

Theodore  F.  Whitmarsh  of  New  York,  N.  Y. 

George  A.  Zabriskie  of  New  York,  N.  Y. 

Clarence  M.  Woolley  of  New  York,  N.  Y. 

Frank  W.  Taussig  of  Washington,  D.  C. 
All  of  the  capital  stock  is  to  be  held  by  the  United 
States  except  such  as  may  be  required  for  qualifying 
the  individual  directors  or  incorporators,  such  qualifying 
shares  to  be  held  by  such  directors  or  incorporators  in 
trust  for  the  use  and  benefit  of  the  United  States. 

I  will  arrange  to  purchase  the  entire  capital  stock  of 
such  corporation  out  of  the  appropriation  of  fifty  million 
($50,000,000)  dollars  authorized  by  the  first  provision 
in  the  Act  of  July  i,  1918,  entitled  "An  Act  making 
appropriations  for  sundry  civil  expenses  of  the  Govern- 
ment for  the  fiscal  year  ending  June  30,  1919,  and  for 
other  purposes,"  from  which  appropriation  I  have  set 
aside  five  million  ($5,000,000)  dollars  for  this  purpose. 

I  hereby  direct  that  any  outstanding  stock  standing 
in  the  name  of  the  United  States  shall  be  voted  by  you 
or  by  such  person  as  you  see  fit  to  appoint  your  agent 
for  this  purpose. 

(Signed)  Woodrow  Wilson. 


IMPORTANT  LETTERS  AND  MEMORANDA 


EXHIBIT   17  229 

EXHIBIT  17 
Letter  re  Export  Embargo  on  Sugar 

July  29th,  1919. 
Mr.  Lawrence  Bennett, 
War  Trade  Board, 

Washington,  D.  C. 
My  dear  Mr.  Bennett :  — 

As  you  know,  the  Food  Administration  is  rapidly 
closing  up  its  affairs,  and  with  its  distributive  and  en- 
forcement machinery  eliminated,  the  effectiveness  of 
war  time  control  is  not  possible  at  this  time. 

The  one  commodity,  however,  it  is  highly  important, 
in  the  interest  of  American  consumers,  we  do  keep  con- 
trol of,  is  sugar,  and  in  view  of  the  fact  that  sugar  is 
scarce  throughout  the  world,  and  our  price  here  is  the 
most  attractive,  there  is  such  a  demand  for  our  sugar 
from  abroad  that  the  Sugar  Equalization  Board  is  ex- 
periencing difficulty  in  getting  the  proper  distribution 
throughout  the  United  States. 

We  have  maintained  imports  of  raw  sugar  to  the  full 
complement  of  refinery  capacity,  but  recently,  with  the 
lifting  of  export  embargoes  and  more  shipping  space 
available,  due  to  the  release  of  tonnage,  the  export 
demand  for  sugar  has  increased  tremendously,  so  that 
today  we  find  our  own  consumers  in  competition  with 
those  of  other  countries  for  available  stocks. 

This  Board  has  the  full  cooperation  and  help  of  the 
sugar  refiners,  but  it  is  impossible  at  the  present  time  to 
control  the  distributive  trades.  We  find  that  large 
contracts  for  export  have  been  placed  with  dealers  and 
second  hands  for  export,  and  there  is  no  way  to  prevent 
this  exportation  except  by  action  of  the  War  Trade 
Board  section  of  the  State  Department,  issuing  all  ex- 
port licenses  subject  to  the  approval  of  the  Sugar  Board, 
and  old  export  licenses  cancelled. 


230  APPENDIX 

Over  50,000  tons  will  be  shipped  to  Europe  during 
July  and  August  unless  something  is  done  to  prevent  it. 
The  result  will  be  the  scarcity  of  sugar  in  this  country, 
which  at  this  time  of  fruit  harvest  will  be  disastrous. 
The  prices  of  sugar  in  Europe  at  retail  are 

England fourteen  cents 

France fifteen  cents 

Italy sixteen  cents 

Switzerland twelve  and  two-thirds  cents 

as  against  our  refiners'  price  of  nine  cents  and  retail 
price  of  ten  to  eleven  cents.  You  will  therefore  see 
Europe  will  drain  our  country  of  refined  sugar  unless 
something  is  done  to  prevent  it. 

You,  of  course,  know  that  we  have  contracted  for 
the  entire  Cuban  crop  of  raw  sugar  which  is  now  being 
shipped  to  America,  and  we  are  disposing  of  some  of 
our  raw  holdings  in  Cuba  in  order  to  help  out  the  Eu- 
ropean situation.  The  control  of  the  exportable  re- 
fined sugar,  however,  should  be  in  our  hands  and  enable 
our  people  to  have  sugar  enough  to  care  for  and  preserve 
the  present  harvest  of  fruits  and  vegetables. 

Yours  very  sincerely, 
U.  S.  Sugar  Equalization  Board,  Inc., 
(Signed)  George  A.  Zabriskie, 
President. 

NOTE.  —  The  members  of  the  War  Trade  Board  ruled  positively  against 
the  imposition  of  any  embargo  upon  the  export  of  sugar. 

EXHIBIT  18 

MEMORANDUM   FOR   SUGAR   EQUALIZATION   BOARD 
RE  THE  IMPORTANCE  OF  SUGAR  AS   FOOD 

BY  RAYMOND  PEARL 

STATISTICAL  DIVISION,  U.  S.  FOOD  ADMINISTRATION 
(Aug.  9,  1918) 

i.  The  purpose  of  this  memorandum  is  to  put  before 
the  Board  some  data  as  to  the  importance  of  sugar  as 


EXHIBIT   18  231 

a  food,  and  the  necessity  of  maintaining  an  adequate 
supply. 

2.  Foods  serve  two  purposes  —  the  repair  and  main- 
tenance of  bodily  tissues,  and  the  furnishing  of  energy. 
Sugar  plays  no  part  in  the  replenishment  of  bodily  tissues. 
Its  sole  function  is  to  furnish  energy,  but  within  that 
field  it  occupies  a  position  of  first  class  importance. 
Quantitatively  it  is   not  replaceable  in  the  dietary  of 
this  country  by  any  other  food  material,  and  qualita- 
tively there  are  only  a  few  materials  like  glucose,  honey, 
maple  sugar  and  sorghum  syrup  which  can  substitute 
for  it.     Certain  foreign  countries  substitute  alcohol  for 
sugar  in  the  dietary,  but  that  is  not  done  to  any  signif- 
icant extent  by  our  population. 

3.  Food  energy  is  measured  in  terms  of  calories.     To 
our   national   food   resources    the   domestic   beet   and 
domestic  cane  sugars,  and  molasses,  contribute  together 
4,193,935,000,000   calories   annually   (7   year   average), 
or  3.046  per  cent  of  all  the  calories  produced  in  the  form 
of  human  food  in  the  United  States.     Our  domestically 
produced  sugars  (beet  and  cane)  stand  in  the  eighth 
place  in  importance   as   energy  producers   among   all 
foods  produced  in  this  country,  being  exceeded  in  im- 
portance in  this  respect  only  by  wheat,  pork  and  lard, 
dairy    products,    cornmeal,    beef,    cottonseed    oil    and 
potatoes. 

4.  But  our  domestic  sugar  production  is  but  a  frac- 
tion of  our  total  sugar  consumption.     We  depend  to  a 
very  large  degree  upon  our  island  possessions  and  Cuba 
for  our  sugar  supply.     Our  imports  of  sugar  contribute 
to  the  nutrition  of  the  nation  about  14,000,000,000,000 
calories  annually.     Our  total  sugars  then  stand  in  the 
dietary  as  sources  of  energy  in  fourth  place,  being  ex- 
ceeded only  by  wheat,  pork  and  lard  and  dairy  products. 

5.  The  experience  of  the  war  has  shown  that  serious 
reduction  in  the  sugar  ration  is  followed  by  more  dis- 
comfort, discontent,  and  loss  of  morale  than  reduction 


232  APPENDIX 

in  any  other  food.  The  physiological  reason  for  this 
is  that,  with  the  exception  of  alcohol,  sugar  stands 
practically  preeminent  in  the  quickness  with  which  its 
energy  is  made  available  in  the  body.  The  experience 
of  Germany  has  shown  that  when  other  foods  were  scarce 
the  people  instinctively  increase  their  sugar  intake  be- 
cause of  the  nutritional  satisfaction  it  furnishes.  In  this 
country  the  flour  restrictions,  which  were  far  more  drastic 
relatively  than  sugar  restrictions  have  at  any  time  been, 
caused  much  less  discomfort  and  complaint  on  the  part 
of  the  population  than  have  the  sugar  restrictions. 

6.  At  prevailing  prices  sugar  is  one  of  the  cheapest 
sources  of  energy  among  all  human  foods.     In  May, 
1918, 100  calories  in  sugar  cost  .61  cents.     The  only  foods 
in  which  one   could  procure  100  calories  cheaper  than 
this  were,  wheat  flour  including  graham^  cornmeal,  corn 
flour,  rye  flour  and  rolled  oats. 

7.  The  writer  believes,  for  reasons  set  forth  above 
and  others  not  here  developed,  that  during  a  war  it  is 
of  first  class  importance  to  maintain  a  supply  of  sugar 
such  that  the  civilian  population  may  at  all  times  have 
up  to  at  least  80  per  cent  of  their  normal  household 
intake  of  this  commodity,  and  except  for  very  brief 
periods  of  possible  local  shortage,  up  to  100  per  cent  of 
household  consumption.    There  is  great  potential  danger 
in  a  seriously  lowered  sugar  ration  in  a  warring  country 
if  extended  over  any  considerable  period  of  time. 

8.  It   is   distinctly   to   be   understood    that   in   this 
memorandum  the  writer  expresses  no  opinion  whatever 
as  to  the  adequacy  of  the  prospective  sugar  supplies 
for  1918-19,  or   1919-20.    These  prospective  supplies 
may   be   entirely    adequate   without    any    stimulation 
whatever  by  increased  price.     The  problem  of  whether 
they  are  likely  to  be  or  not  is  a  problem  entirely  separate 
and  distinct  from  the  subject  of  this  memorandum,  and 
one  on  which  the  writer  expressly  avoids  stating  any 
opinion  at  this  time  and  in  this  document. 


EXHIBIT   19  233 

EXHIBIT  19 

Letter   from    Messrs.   Hawley   and   Rionda    tendering 
Cuban  crop  of  1919-20  to  the  American  Government. 

New  York,  July  29,  1919 
George  A.  Zabriskie,  President 

of  the  "Equalization  Board" 

in  Wall  Street 

New  York  City 
Dear  Sir :  — 

In  pursuance  of  the  informal  discussions  conducted 
between  the  subscribers,  speaking  by  authority  for  the 
Cuban  Government,  and  members  of  "The  Equaliza- 
tion Board"  as  the  purchasers  and  distributors  of  Cuba's 
Sugar  Crop  for  the  existing  year,  we  deem  it  expedient 
to  submit  for  your  information,  and  as  far  as  you  may 
determine,  for  your  action  hi  continuing  the  control 
and  disposition  of  Cuba's  Crop  of  Sugar  for  the  ensuing 
year  of  1920. 

In  presenting  our  suggestions,  while  acting  directly 
for  the  Cuban  producer,  we  accept  the  grave  responsi- 
bility of  speaking  scarcely  less  for  the  American  con- 
sumer, and  for  that  vast  army  of  foreign  consumers  whose 
needs  are  of  such  concern  to  the  American  Government. 

Fortunately  for  every  interest  involved,  the  great 
bulk  of  sugar  required  by  importing  countries  is  pro- 
vided by  the  Island  of  Cuba  —  but  she  takes  no  note  of 
this  "  coign  of  vantage  "  —  on  the  other  hand,  the  Island 
Republic,  its  Hacendados  and  farmers,  and  manu- 
facturers of  sugar,  tender  through  its  own  Government, 
providing  it  meets  with  the  consent  and  cooperation  of 
the  American  Government,  the  entire  wealth  of  her 
production,  under  such  terms  as  may  be  agreed  upon  by 
contracting  parties,  at  a  price  moderate,  but  compen- 
sating to  the  producer  and  well  within  the  economic 
reach  of  the  consumer. 


234  APPENDIX 

This  is  the  fundamental  basis  upon  which  our  tender 
is  made. 

If  accepted  through  the  continued  life  and  active 
participation  of  your  respected  Board  —  or  a  similar 
body  —  the  whole  question  would  be  greatly  simplified. 
If,  on  the  contrary,  the  opportunity  to  serve  —  not  the 
American  people  alone  but  the  Universal  Welfare  —  is  for 
any  reason,  technical  or  otherwise,  not  availed  of  through 
one  medium  or  another,  there  is  not  a  community  any- 
where in  America,  in  Europe  or  Asia  that  will  not  feel 
the  consequence  of  our  failure  to  provide  a  stable  price 
for  this  most  necessary  article  of  human  consumption. 

Cuba  approaches  this  question  with  full  recognition 
of  her  relations  to  the  American  people  and  their 
Government  and  in  the  spirit  of  comity  and  desire  for 
a  complete  understanding. 

We  await  with  unflagging  interest  your  reply,  the 
subject  of  which  we  are  assured  is  to  you,  as  it  is  to  us, 
the  most  momentous  in  the  world's  economy  of  today. 
With  assurances  of  great  respect, 
Faithfully  yours, 

(Signed)  R.  B.  Hawley 
Manuel  Rionda 

EXHIBIT  20 

Letter  from  Messrs.  Hawley  and  Rionda  withdrawing 
tender  of  Cuban  1919-20  crop. 

September  22,  1919 

Mr.  George  A.  Zabriskie,  Chairman 
of  the  "Equalization  Board" 
in  Wall  Street 
New  York  City 

Dear  Sir : 

We  beg  leave  to  refer  to  our  letter  bearing  date  of 
July  29th,  1919,  copy  of  which  we  inclose;  as  you  will 


EXHIBIT  20  235 

observe  by  its  terms,  we  were  pleased  at  that  time  to 
inform  your  respected  Board  that  the  Republic  of 
Cuba,  its  Hacendados  and  farmers,  and  manufacturers 
of  sugar,  acting  through  us  in  a  representative  capacity, 
were  willing  to  tender  to  you  or  a  similar  body  the  entire 
production  of  Cuba  on  such  terms  as  might  be  agreed 
upon  by  the  contracting  parties,  at  a  price  moderate, 
but  compensating  to  the  producer  and  well  within  the 
economic  reach  of  the  consumer,  always  provided  that 
this  offer  met  with  the  full  consent  and  cooperation  of 
the  United  States  Government. 

In  the  interval  that  has  transpired  we  have  awaited 
your  answer,  confidently  believing  that  the  United 
States  Government  would  undertake  the  continued 
control  of  sugar,  and  every  interest  concerned,  especially 
the  American  consumer,  would  experience  the  advantage 
of  a  stabilized  market.  Unfortunately,  the  logic  of  the 
situation  has  not  impressed  the  Government,  or  in 
keeping  with  its  traditional  policy, — the  war  being  over, 
—  it  is  thought  best  to  permit  the-  market  to  be  ruled 
by  the  natural  law  of  supply  and  demand. 

While  we  had  hoped  for  a  different  conclusion  to  the 
negotiations  put  forward  by  Cuba,  with  the  wealth  of 
production  represented  by  her  producers,  we  reluctantly 
accept  the  situation  now  existing  and  return  the  authority 
under  which  we  were  acting.  The  spirit  of  the  times  is 
so  fraught  with  speculation  that  wide  fluctuations  must 
inevitably  ensue,  but  whatever  developments  may 
occur,  speaking  now  only  for  ourselves,  and  whatever 
influence  we  may  exert,  we  shall  employ  our  best  efforts 
in  hehping  to  maintain  a  conservative  situation. 
With  assurances  of  great  respect, 
Faithfully  yours 

(signed)  R.  B.  Hawley 
Manuel  Rionda 


236  APPENDIX 

EXHIBIT   21 

Memorandum  to  the  U.  S.  Secretary  of  Agriculture  on 
the  McNary  Bill. 

January  2,  1919 
Hon.  D.  F.  Houston 

Secretary  of  Agriculture 
Washington 
D.  C. 

My  dear  Mr.  Houston  : 

Referring  to  our  conference  in  Philadelphia  on  Wednes- 
day, and  in  conformance  with  your  request,  the  Board  at 
a  meeting  this  morning  prepared  the  enclosed  Memo- 
randum, which  I  am  authorized  to  forward  to  you  as 
an  expression  of  their  views. 

Yours  very  truly 

(Signed)  George  A.  Zabriskie 

President 
United  States  Sugar  Equalization  Board,  Inc. 

MEMORANDUM 

Referring  to  the  recent  Act  of  Congress  as  to  sugar 
control,  of  which  Senator  McNary  was  the  patron,  and 
the  Conference  of  the  President  of  the  Sugar  Equaliza- 
tion Board  and  several  members  thereof,  with  the 
Secretary  of  Agriculture  on  Wednesday,  December  31, 
1919: 

During  the  year  1919,  the  Board,  by  reason  of  its 
contracts  with  the  producers  of  beet  and  Louisiana 
sugar  for  the  crop  of  1918-19 ;  its  agreement  with  the 
cane  refiners  and  the  purchase  of  the  Cuban  crop  of  1919, 
was  enabled  to  establish  the  price  of  refined  sugar  in 
the  United  States  at  not  exceeding  nine  (9)  cents  per 
pound  wholesale,  which  reflected  a  price  of  from  io£ 
cents  to  ii  cents  retail,  and  this  continued  until  the 


EXHIBIT  21  237 

new  1919-20  crop  of  beet  and  Louisiana  sugars  began 
to  come  into  the  market,  as  to  which  this  Board  had 
no  contract  and  over  which  it  could  exercise  no  control 
of  distribution  and  price,  and  thereafter  (from  about 
October  i5th)  the  control  which  the  Board  could  exercise 
applied  only  to  the  remainder  of  the  Cuban  sugar  (1919 
crop)  which  it  had  purchased  and  which  was  deliverable 
on  or  before  November  30,  1919,  and  refined  sugar  from 
this  Cuban  raw  sugar  has  been  sold  at  not  exceeding 
nine  (9)  cents  per  pound  wholesale. 

In  view  of  the  fact  that  there  is  and  has  been  through- 
out the  last  several  years  a  shortage  of  sugar  in  the 
world,  and  the  fact  that  the  people  of  the  United  States 
used  this  year,  1919,  600,000  tons  of  sugar  in  excess  of 
the  amount  consumed  in  the  year  1918  and  300,000  tons 
more  than  was  ever  used  in  the  history  of  the  country ; 
the  further  fact  that  the  consumption  of  sugar  per 
person  increased  in  the  year  1919,  to  about  92  pounds 
as  against  a  previous  normal  consumption  of  about 
85  pounds  per  person ;  the  further  fact  that  the  price  of 
sugar  over  which  the  Board  had  control  in  the  year 
1919  was  lower  throughout  the  United  States  than  in 
any  other  country  of  the  world,  the  Board  feels  that 
its  method  of  sugar  control  and  distribution  was  amply 
justified,  as  an  instrument  for  assuring  a  supply  of  sugar 
at  a  reasonable  price,  under  abnormal  condition.  Of 
course,  the  Board  cannot  be  responsible  for  distribution 
and  prices  of  beet  and  Louisiana  sugar,  in  the  fall  of 
1919,  after  the  contract  which  the  Board  had  as  to  such 
sugars  came  to  an  end. 

In  August,  1919,  an  offer  was  made  by  Cuban  author- 
ized representatives  to  sell  the  Cuban  crop  of  1920  to 
the  Board  and  at  that  time  the  Board  felt  that  it  could 
renew  its  agreements  with  the  producers  of  beet  and 
Louisiana  sugars  for  the  new  crop,  which  was  then  about 
to  come  in.  Refiners  also  indicated  a  willingness  to 
extend  their  agreement  with  the  Board  for  an  additional 


238  APPENDIX 

year,  and  in  view  of  the  abnormal  conditions  as  to  sugar 
supply  and  consumption,  then  apparent,  the  majority 
of  the  Board  were  of  the  opinion  that  the  Cuban  crop 
of  1920  should  be  bought  by  the  Board  and  its  agree- 
ments with  the  Refiners  and  domestic  sugar  producers 
should  be  renewed  for  another  year,  and  a  memorandum 
was  sent  to  the  President  of  the  United  States  on 
August  14,  1919,  on  behalf  of  the  majority  recommend- 
ing this  course. 

At  the  first  hearing  upon  the  McNary  Bill  before  the 
Senate  Committee  on  October  3rd,  1919,  the  Board, 
through  its  President,  expressed  to  the  Committee  its 
view  that  the  Cuban  crop  for  1920  could  and  should  be 
purchased  at  a  reasonable  price,  provided  the  powers 
heretofore  exercised  by  the  Board  were  continued  until 
December  3ist,  1920,  thus  enabling  the  Board  to  see 
that  the  consumer  secured  refined  sugar  at  a  reasonable 
price,  based  upon  the  price  of  Cuban  raw  sugar.  At 
that  time  the  Board  felt  that  its  agreements  with  the 
beet  and  Louisiana  sugar  producers,  as  well  as  the 
Refiners,  could  be  renewed,  thus  enabling  the  Board  to 
carry  out  for  another  year  the  same  course  of  action 
which,  in  the  year  1919,  secured  the  sugar  supply  of 
the  United  States  at  a  price  not  exceeding  9  cents  per 
pound  wholesale,  until  the  new  sugar  began  to  come  in, 
over  which  the  Board  had  no  control. 

No  action  was  taken  by  the  President  of  the  United 
States  upon  the  Memorandum  to  him,  above  mentioned, 
and  the  Board  concluded  that  his  view  was  that  its 
activities  should  cease  on  December  3ist,  1919,  and  it 
has  been  preparing  to  follow  this  course. 

No  action  was  taken  by  Congress  until  December  2oth, 
when  the  Act  above  referred  to  was  passed. 

Conditions  have  now  so  changed  that  the  members  of 
the  Board  do  not  believe  that  action  by  it,  under  the 
provisions  of  the  Act  of  Congress  above  mentioned,  offers 
a  solution  of  the  problem  of  securing  a  regular  supply  of 


EXHIBIT  21  239 

sugar  for  the  people  of  the  United  States,  for  the  year 
1920,  at  a  reasonable  price. 

A  considerable  quantity  of  the  Cuban  crop  of  1920 
has  already  been  sold  overseas  and  to  American  refiners, 
and  one  of  the  elements  of  strength,  helping  materially 
to  make  the  Board's  control,  heretofore,  effective,  was 
the  fact  that  it  owned  and  controlled  the  entire  crop  of 
Cuban  sugar  and  no  refiner  could  secure  any  part  thereof 
unless  he  conformed  to  proper  regulations  of  distribution, 
prices  and  profits. 

There  is  no  person  or  committee  now  authorized  to 
sell  the  entire  unsold  balance  of  the  Cuban  crop  of  1920, 
and  if  the  United  States,  through  the  Board,  should 
appear  in  the  Cuban  market  as  a  purchaser  of  sugar, 
the  tendency  of  such  action,  especially  when  the  sugar 
must  be  bought  in  individual  lots,  would  be  to  strengthen 
the  market  and  further  increase  the  price,  which  has 
already  advanced  to  a  point  where  the  Board  hardly 
feels  that  it  would  be  sound  judgment  to  buy. 

It  is  certain  that  the  time  must  come  when  the  United 
States  will  no  longer  assume  the  control  of  this  industry, 
and  up  to  December  2oth  it  seemed  to  be  the  policy  for 
the  United  States  to  now  cease  its  activities  and  allow 
this  trade  to  go  back  to  the  ordinary  basis  of  supply  and 
demand,  and  it  seems  very  doubtful  to  the  Board 
whether,  at  this  time,  that  apparent  policy  can  be  suc- 
cessfully reversed  and  effective  control  of  supply,  dis- 
tribution and  prices  be  reestablished. 

The  wholesale  price  of  sugar  in  the  United  States  is 
such  for  January,  February  and  March  delivery,  that 
there  is  little  hope  of  the  Board  being  able  to  reduce  the 
same,  by  purchasing  Cuban  sugar  and  attempting  to 
reestablish  control  of  the  industry.  It  is  possible,  of 
course,  that  when  the  flow  of  raw  sugars,  from  the  large 
crops  of  Cuba  and  Porto  Rico,  reaches  its  peak  in  March 
and  April,  prices  may  be  somewhat  reduced.  The  Re- 
finers' price  is  now  15.20  cents  per  pound  wholesale,  which 


240  APPENDIX 

is  a  considerable  reduction  from  the  first  offerings  of 
sugar  refined  from  new  cane  sugars.  The  offering  of 
refined  sugar  for  February  delivery  is  at  13.50  cents 
per  pound  wholesale,  with  still  further  reductions  for 
March,  which  indicates  a  tendency  in  the  industry 
towards  settling  down  to  normal  conditions. 

The  Government  having,  therefore,  proceeded  up  to 
this  time,  apparently  on  the  basis  that  the  activities 
of  this  Board  would  cease  with  the  end  of  the  present 
agreement  for  the  Cuban  crop  of  1919,  the  Board  feels 
that  any  attempt  on  its  part,  at  this  late  day,  to  carry 
on  its  former  activities  will  be  met  with  serious  diffi- 
culties and  embarrassment. 

The  Act  of  Congress  limits  the  control  of  the  Board 
over  domestic  sugars  to  June  30,  1920,  and  should  the 
Board  succeed  in  purchasing  a  large  quantity  of  Cuban 
sugar  for  delivery  throughout  the  year  1920,  after 
June  3oth,  the  Board  would  find  itself  in  the  situation 
of  trying  to  maintain  a  uniform  reasonable  price  over 
the  whole  country,  with  no  control  whatsoever  over 
Louisiana,  Beet,  Hawaiian,  and  Porto  Rican  sugars,  and 
this  too  at  the  time  of  the  year  when,  if  at  all,  absolute 
control  of  all  sugars  by  the  Board  would  be  essential. 

The  Act  further  forbids  the  Board  from  putting  into 
effect  its  present  system  of  zone  distribution,  under  which 
consumers  get  their  supply  from  the  nearest  and  most 
convenient  point  of  production.  This  system  has  been 
most  useful,  during  the  year  1919,  in  effecting  a  fair 
distribution  of  available  sugar. 

Under  the  Act  above  mentioned  certain  powers  are 
granted  to  the  President  to  be  used  at  his  discretion,  and 
the  Board  suggests  that  the  situation  should  be  made 
clear  by  authoritative  statement  as  to  what  powers  will 
or  will  not  be  exercised,  so  that  the  industry  as  a  whole, 
and  especially  the  Refiners,  may  without  the  embarrass- 
ment of  uncertainty,  proceed  to  make  necessary  plans 
to  secure  such  raw  sugars  as  may  be  essential  to  fill 
the  requirements  of  the  people  of  the  United  States. 


EXHIBIT  21  241 

AMERICAN  RELIEF  ADMINISTRATION 

Herbert  Hoover,  Director  General 
115  Broadway,  New  York  City 

January  19,  1920. 
Mr.  George  A.  Zabriskie,  Pres., 
U.  S.  Sugar  Equalization  Board, 
in  Wall  St., 
New  York  City. 

Dear  Sir : 

The  undersigned  concur  with  the  other  members  of 
the  Board  in  the  memorandum  sent  to  the  President. 
We  were  intimately  associated  with  the  operations  of 
the  Food  Administration  from  the  beginning  to  the  end, 
and  whether  or  not  the  Department  of  Justice  exercise 
their  licensing  power,  our  observations  from  experience 
with  the  Food  Administration  may  be  of  some  value. 

The  present  and  prospective  sugar  shortage  and  exces- 
sively high  prices  being  obtained  in  the  United  States 
point  to  the  possibility  that  the  Department  of  Justice 
may  exercise  control  through  the  licensing  system  to 
prevent  hoarding  and  profiteering  in  the  distributing 
trades.  This  suggests  a  control  by  the  rationing  system 
in  order  to  curtail  the  consumption  of  sugar  in  non- 
essential  industries,  and  thus  enlarge  the  proportion 
available  for  the  household.  Such  a  rationing  system 
of  the  candy,  sweet  drink,  and  other  non-essential  trades 
would  reduce  the  demand  and  should  (a)  protect  the 
supply  to  the  householder  throughout  the  year,  (6)  by 
decreasing  the  demand,  decrease  the  price,  (c)  drive  out 
speculation  and  hoarding  to  a  large  degree. 

While  we  assume  the  cost  of  such  rationing  could 
properly  be  paid  from  the  resources  of  the  Board,  we 
would  point  out  that  some  established  government  de- 
partment having  already  existing  federal  agencies  through- 
out the  country,  such  as  the  Department  of  Justice  or 


242  APPENDIX 

the  Department  of  Agriculture,  could  easily  use  its 
machinery  for  sucb.  a  purpose.  Our  experience  in  the 
Food  Administration  demonstrated  clearly,  however, 
that  the  central  control  must  emanate  from  Washington. 
Our  suggestion  is  that,  while  high  prices  will  effect 
conservation,  it  is  a  conservation  of  classes  whereby  the 
rich  continue  their  purchases  without  restriction,  while 
the  poor  are  unable  to  buy  at  all. 

From  our  experience  in  the  Food  Administration,  the 
present  situation  is  not  unlike  the  1918  and  1919  periods, 
in  that  the  peak  of  sugar  importation  will  be  reached  in 
March  or  April,  at  which  time  there  will  be  assured 
supplies,  and  possibly  some  amelioration  in  price.  But 
after  this  time  world  shortages  will  aggravate  the  market 
and  we  can  expect  pronounced  irregularities  in  the 
speculative  sugar  trade,  and  this  also  points  to  a  repe- 
tition of  an  acute  shortage  at  the  period  of  greatest 
consumption  in  July,  August,  and  September.  Should 
there  be  any  desire  to  prevent  such  shortages,  drastic 
rationing  of  non-essential  industries  must  be  inaugurated 
at  once. 

Faithfully  yours, 
(signed)  Edgar  Rickard 
(signed)  Theodore  F.  Whitmarsh 


STATISTICAL  TABLES 


EXHIBIT  22 


245 


EXHIBIT  22 

RECEIPTS    AND    MELTINGS    FOR    EACH    REFINERY 
FOR  THE  YEAR  1918 

Unit:  Long  tons 


REFINERIES 

TOTAL 
RECEIPTS 
FOB  1918 

TOTAL 
MELTINGS 

FOR  I9l8 

BOSTON  : 
American    

16121/1 

l6l382 

Revere   

24.2O7 

22600 

Total  Boston    

IOC7TT 

194982 

NEW  YORK  : 
American,  Brooklyn      

272081 

366066 

American,  Jersey  City  

82043 

8226l 

Arbuckle     

2I262I 

2T262I 

Federal  

27Q7CC 

277I4.O 

National,  New  York     

106700 

I972OI 

National,  Yonkers    

13  4.127 

124.127 

Warner  t 

2I27>;2 

212702 

Total  New  York   .....! 

I4.QIl8o 

I4.822IO 

PHILADELPHIA: 
American,  Reed  Street  

27104.6 

27l82C 

American,  Reserve   

McCahan    
Pennsylvania  

73359 
1226^7 

73359 
131881 

Total  Philadelphia    
SAVANNAH  : 
Savannah    

477962 
760  ?o 

477075 

727O4. 

NEW  ORLEANS  : 
American    

2O2<\6o 

204.624. 

Colonial      .     .     .     .     ._    .     .    .'    . 

68872 

6724.< 

Henderson  

4.1  <;6o 

4.2ICI 

Godchaux  

II286 

10870 

Total  New  Orleans    

4.IS278 

4.I4.8OO 

GALVESTON  : 
Imperial      

4.23  22 

4.2222 

SAN  FRANCISCO  : 
California-Hawaiian      

227O2O 

232O';O 

Western      

ifaiftC 

I6672O 

Total  San  Francisco  

4OO4^ 

^00780 

Total  American  Sugar  Refining  Co. 
Grand  Total     

1180944 
•?  OQ0886 

1176268 
3086082 

246 


APPENDIX 


RECEIPTS    AND    MELTINGS    FOR    EACH    REFINERY 
FOR  THE  YEAR   1919- 

Unil:  Long  tons 


RE  FINERIES 


TOTAL 
RECEIPTS 
FOR  1919 


BOSTON  : 

American 180313 

Revere 95230 

Total  Boston 275543 

NEW  YORK  : 

American,  Brooklyn 385003 

American,  Jersey  City 151882 

Arbuckle 259429 

Federal .'  298165 

National,  New  York     .     .     .     .    .  282489 

National,  Yonkers 194595 

Warner 279582 

Total  New  York        1851145 

PHILADELPHIA  : 

American,  Reed  Street 312972 

American,  Reserve 113050 

McCahan 87176 

Pennsylvania 184634 

Total  Philadelphia     .  •  .     .     .     .  697832 

SAVANNAH : 

Savannah 92196 

NEW  ORLEANS  : 

American 319961 

Colonial 83280 

Godchaux 58304 

Henderson 49129 

Total  New  Orleans 510674 

GALVESTON  : 

Sugarland  Industries 59121 

SAN  FRANCISCO  : 

California-Hawaiian 272025 

Western 140529 

Total  San  Francisco 412554 


Total  American  Sugar  Refining  Co. 
Grand  Total 


1463181 
3899065 


EXHIBIT  23 


247 


EXHIBIT  23 

TOTAL  SHIPMENTS  OF  ROYAL  COMMISSION  SUGAR 
REFINED   ON  TOLL  BY  UNITED   STATES   RE- 
FINERS,  1918-19   CUBAN  CROP 

Unit:  Long  tons 


ALLOCATIONS 

TO  REFINERS 

TOTAL 

REFINERY 

Raw 
in  Full 

Refined 
in  Full 

SHIPPED  BY 

REFINERS 

American      

220  ^(X 

2IA.4.QO 

214  4OO 

Arbuckle      

42.012 

4.O.ICK 

4O  IO? 

Colonial  

1^.646 

12.  7  <H 

12  7?^ 

Federal    

eo.4.77 

4.7.  17S 

47  17? 

Godchaux     

O.O78 

-   8,484 

4/170* 

Henderson    

7.626 

7,128 

7  128 

7^,^82 

7O,33I 

7O.33I 

Pennsylvania    .... 
Revere     

28,679 
T  c  .4.08 

26,803 
I4.4OO 

26,803 
14  4OO 

Savannah     

11,711 

IO.S7I 

io.<;7i 

Warner    

28,4O9 

26,550 

26,550 

TOTAL     

<CI2,433 

478,700 

474.776 

NOTE.  —  The  above  figures  cover  shipments  on  the  1918-19  Cuban 
crop  only  and  do  not  include  42,727  tons  of  sugars  shipped  to  the  Royal 
Commission  in  1919  from  the  balance  of  the  1917-18  crop.  Of  the  above 
shipments  of  474,776  tons  on  the  1918-19  crop,  26,432  tons  were  shipped 
in  January,  1920.  Table  II,  Exhibit  25  below,  gives  the  1919  shipments 
to  the  Royal  Commission  by  months. 


*  4,014  tons  not  shipped  to  date. 


248 


APPENDIX 


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EXHIBIT   25 


249 


EXHIBIT  25 

BASIC   STATISTICAL   DATA   ON   SUGAR  FOR   YEAR 
1919   COMPARED  WITH   1918 

(All  Quantities  in  Long  Tons) 
TABLE  I  —  GENERAL  SUMMARY 
January  i  to  December  31,  1919 


REFINERS' 

DELIVERIES 

DELIV- 
ERIES 

BALANCE 

FOR 

Total 

Weekly 
Average 

SUGAR. 

LA.  CANEf 

CONSUMP- 
TION 

ist  Quarter  —  1919  . 

711,000 

SS.ooo 

307,000 

100,000 

918,000 

April  (5  weeks)  .     . 
May  (4  weeks)    .     . 
June  (4  weeks)    .     . 

454,000 
382,000 
430,000 

91,000 
95,000 
108,000 

68,000 

72,000 
73,000 

78,000 
49,000 
128,000 

444,ooo 
405,000 
375,000 

ad  Quarter  —  1919 

1,266,000 

97,000 

213,000 

255,000 

1,224,000 

July  (s  weeks)    .    . 
August  (4  weeks)     . 
September  (4  weeks) 

469,000 
309,000 
327,000 

94,000 
77,000 
82,000 

68,000 
30,000 
56,000 

56,000 
53,000 
40,000 

481,000 
286,000 
343.000 

3d  Quarter  —  1919 

1,105,000 

79,000 

154,000 

149,000 

1,110,000 

October  (5  weeks)  . 
November  (4  weeks) 
December  (4  weeks) 

262,000 
170,000 
125,000 

52,000 
43,ooo 
31,000 

67,000 
176,000 
153,000 

53,ooo 
58,000 
44,000 

276,000 
288,000 
234,000 

4th  Quarter  —  1919 

557,000 

43,000 

396,000 

155,000 

798,000 

Total  for  Year,  .    . 
January  I  -  Decem- 
ber 31  —  1919 
52  weeks    .... 

3,639,000 

70,000 

i,u8,oooj 

659,000 

4,098,000  J 

January  i  to  December  31,  1918 


ist  Quarter  —  1918 

(13  weeks)  .    .    . 

651,000 

50,000 

202,000 

9,000 

844,000 

2d  Quarter  —  1918 

(13  weeks)  .    .    . 

999,000 

77,000 

134,000 

25,000 

1,108,000 

3d  Quarter  —  1918 

(13  weeks)  .    .    . 

690,000 

53,ooo 

SS.ooo 

36,000 

709,000 

4th  Quarter  —  1918 

(13  weeks)  .    .    . 

514,000 

40,000 

300,000 

80,000 

734,000 

Total  for  Year, 

January  i  -  Decem- 

ber 31,  1917    .    .    . 

2,854,000 

55,000 

691,000 

190,000 

3,395,000 

t  Estimated.    J  Including  imports  for  the  year  of  Hawaiian  refined  and  raw  and  washed 
sugars  for  which  data  are  not  available  by  months. 


2  50 


APPENDIX 


TABLE  II  —  EXPORTS  FROM  THE  UNITED  STATES,  1919 


REPORTED 

REPC 

>RTED  BV  REFI 

HERS 

MONTH 

BY  DEPT.  OF 
COMMERCE 

Royal  Com- 
mission 
Shipments 

Sales  Aside 
from 
Royal  Com. 

TOTAL 

January        .... 
February      .... 
March      

29,315 
31,224 
39,265 

28,944 
17,893' 
21,026 

16,449 
12,789 

28,944 
34,342 
33,8i5 

First  Quarter     .     .     . 

99,804 

67,863 

29,238 

97,101 

April    
May    

78,406 
48,899 

77,i4i 
43,464 

15,252 
27,372 

92,393 
70,836 

June    

128,124 

90,794 

16,541 

107,335 

Second  Quarter       .     . 

255,429 

211,399 

59,165 

270,564 

July     

55,784 

43,855 

24,293 

68,148 

August      ..... 

53,169 

S  2A6 

2O.7« 

26,001 

September    .... 

39,908 

10,300 

2O,622 

30,922 

Third  Quarter   .     .     . 

148,861 

59,401 

65,670 

125,071 

October    

52,766 

47,O7O 

O.257 

56,327 

November     .... 
December     .... 

57,656 
44,281 

43,390 
61,264 

20,759 
5,044 

64,149 
66,308 

Fourth  Quarter      .     . 

154,703 

151,724 

35,o6o 

186,784 

TOTAL 
Jan.  i-Decem- 
ber  31,  1919  .     .     . 

658,797 

490,387 

189,133 

679,520 

NOTE.  —  It  will  be  seen  from  the  above  table  that  refiners  reported 
their  exports  for  1919  as  20,723  tons  in  excess  of  the  figure  given  by  the 
Department  of  Commerce.  It  would  have  been  reasonable  to  anticipate 
the  reverse  situation  since  exports  by  others  than  refiners  are  included 
in  the  figures  of  the  Department  of  Commerce.  The  difference  is 
perhaps  to  be  accounted  for  by  variations  in  dates,  methods  of  calcula- 
tion, etc. 


EXHIBIT  25 


251 


TABLE  III  —  REFINERS'  STOCKS  or  RAW  AND  REFINED  SUGAR 
ON  VARIOUS  DATES 


DATE 

REFINED 
STOCKS 

RAW  STOCK 
(REFINED 
BASIS) 

TOTAL  STOCK 
(REFINED 
BASIS) 

1  1  1.  747 

64,313 

178,060 

January  i,  1918    

31,446 

9,537 

40,983 

38,507 

22,249 

60,756 

March  i,  1918      

32,189 

47,863 

80,052 

April  i,  1918    

56,537 

55,937 

112,474 

June  i,  1918     
July  i,  1918      

6l,I38 
40,604 

135,658 
145,004 

196,796 
185,608 

October  i   1918    

82,242 

42,576 

124,818 

January  i,  1919    
April  i    1919    

47,737 
156,068 

18,522 
99,407 

66,259 
255,475 

May  i,  1919     
June  i,  1919     

123,379 
110,515 

172,343 
187,210 

295,722 
297,725 

July  i,  1919      

<\Q.  083 

141,074 

201,057 

August  i,  1919      
September  i,  1919     
October  i    1919     

35,774 
30,880 

•in  O4.O 

107,267 

79,655 
5  1  ,  749 

143,041 
no,535 
90,789 

November  i,  1919     
December  i,  1919      

68,699 

57,275 

51,460 
51,217 

120,159 
108,492 

January  i,  1920    

38,680 

13,566 

52,246 

TABLE  IV  —  REFINERS'  MELTINGS 


MONTH 

No.  OF 
WEEKS  REP- 
RESENTED 

1919 
TONS 

WEEKLY 
AVERAGE 

1918 
TONS 

WEEKLY 
AVERAGE 

January     .     . 
February  .     . 
March       .     . 

•  5 
4 
4 

209,132 
341,284 
330,090 

42,000 
85,000 
82,000 

172,508 
253,389 
301,550 

34,000 
63,000 
75,000 

ist  Quarter    . 

13 

880,506 

68,800 

727,447 

56,000 

April     .     .     . 
May      .     .     . 
June      .     .     . 

5 

4 
4 

450,962 

398,34° 
408,197 

90,000 
100,000 
102,000 

382,863 
339,88o 
334,027 

76,000 
85,000 
84,000 

2(1  Quarter    . 

13 

1,257,499 

97,000 

1,056,770 

81,000 

July      .     .     . 

August      .     . 
September 

5 
4 
4 

478,264 
327,214 
360,542 

96,000 
82,000 
00,000 

354,737 
229,553 
201,926 

71,000 
57,000 
50,000 

3d  Quarter 

13 

1,166,020 

90,000 

786,216 

60,000 

October     .     . 
November 
December 

5 
4 
4 

313,837 
171,012 
H3,9i7 

63,000 
43,000 
28,000 

232,502 
156,411 
126,736 

46,000 
39,000 
32,000 

4th  Quarter   . 

13 

598,766 

46,000 

515,649 

40,000 

Total  for  year 
January  i- 
Decembersi  . 

3,902,791 

76,000 

3,086,082 

59,ooo 

APPENDIX 


TABLE  V  —  DELIVERIES  OF  SUGAR  OTHER  THAN  BY  REFINERS 
A  —  BEET  SUGAR  DISTRIBUTION 


1919 


January 87,016 

February 59,578 

March    .l 64,843 

i st  Quarter 211,437 

April 61,955 

May        66,535 

June       68,816 

2d  Quarter 197,306 

July 63,000 

August 23,000 

September  ;;< 50,000 

3d  Quarter 136,000 

October  * 67,000 

November* 129,000 

December* 128,000 

4th  Quarter 324,000 

Total,  for  year 868,700 

B  —  LOUISIANA  DIRECT  CONSUMPTION  SUGAR 

1919 

First  Quarter 85,000 

Second  Quarter 6,000 

Third  Quarter None 

Fourth  Quarter 100,000 

Total  for  Year 191,000 

C — IMPORTS  OF  HAWAIIAN  REFINED 

1919 

First  Quarter 3,805 

Second  Quarter 5,625 

Third  Quarter None 

Fourth  Quarter 1,246 

Total  for  Year 10,676 


*  Monthly  figures  for  new  crop  beet  prorated  last  four  months,  but  total  figure 
is  from  returns  by  all  beet  sugar  companies  except  three  factories,  production 
of  which  was  negligible. 


EXHIBIT  25  253 

D  —  RAW  AND  WASHED  SUGARS  DIRECT  TO  CONSUMPTION 


1919 

1918 

First  Quarter      

6,788 

15,507 

Second  Quarter                      

4,000 

10,691 

Third  Quarter     

18,266 

3,O32 

Fourth  Quarter  

18,859 

3,700 

Total  for  Year    

47,9*3 

33,33O 

E  —  PURCHASES  AND  ALLOTMENTS  UNDER  GOVERNMENT  CONTROL  OF  THE 
SUGAR  INDUSTRY 


PURCHASED  BY  UNITED  STATES  SUGAR  EQUALIZATION 
BOARD,  INC.,  1919 

PURCHASED  BY  INTER- 
NATIONAL SUGAR  COMMITTEE 
1918 

Long  tons 

Percentage 

Long  tons 

Percentage 

Colombia    .... 
Costa  Rica  .... 
Cuba  

2,916,052 
3,677 
5,027 
167,778 
10,483 
2,143 
505 
24,OOO 

364,592 
10,570 
I,OOO 

916 

7,791 

82.97 
.11 
•14 
4-77 
•30 
.06 
.02 
.68 
10.37 
•30 
•03 
•03 

.22 

48 

22O 

2,37i,5I9 

3,855 
8,953 

31,028 
11,966 
n,45o 
376,6i8 
4,608 
116,705 
4,456 
35,276 

.01 
79.67 

•13 
•30 

1.04 
.40 

•39 

12.65 
.16 
3-92 
•IS 
1.19 

Haiti  

Honduras    .... 
Hawaii   

Java  

Louisiana    .... 
Peru  

Philippines.     .     .     . 
Porto  Rico  .... 
St.  Croix     .... 
San  Domingo  .     .     . 
Surinam      .... 
Venezuela   .... 

TOTAL    

3,514,534 

IOO.OO 

2,976,727 

IOO.OO 

254 


APPENDIX 


EXHIBIT  26 


MEMORANDUM     OF     SUGAR     ARRANGED     FOR     BY 
~  "COMMITTEE1     ON     SUGAR     SUPPLY     FOR     THE 
ARMY,   NAVY,   AND   VARIOUS    RELIEF    ORGANIZA- 
TIONS,"  FROM   AUGUST   17,   1917,  TO   JANUARY   28, 
1920 


PRODUCER 

QUANTITY 
ALLOTTED 

PRO  RATA  DUE 

EXCESS 

DEFICIENCY 

Per  Cent 

Quantity 

American    .... 
National     .... 
Arbuckle     .... 
Federal  .... 

Ibs. 
165,690,519 
51,653,600 
30,051,700 
39,870,000 
33,179,200 
2,954,000 
17,845,600 
8,885,400 
10,890,000 
3,585,000 
19,665,000 
9,368,000 

2,510,000 
2,045,098 

40.650 
12.007 
7.000 
9.605 
7.204 
.960 
4.802 
2.402 
2.330 
.960 
2.402 
1.513 

4.803 
3-362 

Ibs. 
161,865,502 
47,811,048 
27,873,518 
38,246,449 
28,685,832 
3,822,654 
19,121,233 
9,S64,S99 
9,277,899 
3,822,654 
9,564,599 
6,024,662 

19,125,215 
L8,387,253 

Ibs. 
3,825,017 
3,842,552 
3,178,182 
1,623,551 
4,493,368 

1,612,101 

10,100,401 
3,343,338 

Ibs. 

868,654 
1,275,633 
679,199 

237,654 

16,615,215 
11,342,155 

Revere   

Pennsylvania  .     .     . 
McCaian   .... 
Colonial      .... 
Henderson  .... 
Savannah   .... 
Imperial      .... 
California    and   Ha- 
waiian    .... 
Western2     .... 

Beet  Go's  
La.  Sugar  Com.  .     . 
Amer.  Ref.  Com. 
Dealers  

398,193,117 
44,114,400 
49,519,900 
6,612,600 
1,100,000 

IOO.OOO 

398,193,117 

31,018,510 

31,018,510 

TOTAL     .... 

499,540,017 

lThis  Committee  was  organized  as  the  result  of  a  conference  held  in  Washington, 
D.  C.,  on  August  17, 1917,  between  representatives  of  the  Advisory  Commission  of  the 
Council  of  National  Defence,  the  U.  S.  Food  Administration,  War  Industries  Board,  the 
U.  S.  Army  and  Navy  and  a  representative  group  of  Sugar  Refiners  and  Producers,  called 
together  by  the  Council  of  National  Defence  at  the  suggestion  of  Quartermaster  General 
Smith,  of  the  Army,  to  consider  and  provide  for  the  prompt  acceptance  and  delivery 
of  the  sugar  requisitions  of  the  various  branches  of  the  Government  Service,  the  Army, 
Navy  and  Marine  Corps.  The  members  of  this  Committee  were  as  follows  —  Mr. 
James  H.  Post,  Chairman,  Mr.  Manuel  Rionda,  Mr.  F.  R.  Hathaway,  Mr.  R.  M.  Parker, 
Mr.  Horace  Havemeyer,  Secretary.  The  U.  S.  Food  Administration  determined  the 
prices  which  the  Government  was  to  pay  for  the  sugars  obtained  by  this  Committee. 

*  The  small  deliveries  of  sugar  by  the  California-Hawaiian  and  Western  Sugar 
Companies  shown  in  the  above  statement  were  due  to  the  very  light  demand  from  the 
Government  in  the  Pacific  Coast  territory  and  also  to  the  freight  and  other  conditions 
favoring  the  placing  of  such  orders  with  the  Beet  Producers. 


EXHIBIT   27  255 

EXHIBIT  27 

EFFECT  OF  THE   GREAT  WAR  ON  THE  WORLD'S 
SUGAR  PRODUCTION 

The  impact  of  the  Great  War  upon  the  world's  sugar 
production  is  demonstrated  in  the  following  table.  The 
total  production  in  America  increased  from  4,983,432 
long  tons  in  the  crop  year  of  1913-14  to  6,520,005  in 
1918-19.  The  major  portion  of  this  increase  was, 
of  course,  in  Cuba,  where  production  mounted  from 
2,597,732  tons  in  the  crop  year  1913-14  to  3,971,776 
tons  hi  1918-19.  The  Javan  crop  increased  from 
1,345,230  tons  in  1913-14  to  1,669,637  tons  in  1918-19, 
but  there  was  an  abrupt  decline  in  the  1919-20  crop, 
which  was  only  1,300,000  tons.  The  total  world's  cane 
sugar  production  thus  increased  from  9,892,000  tons  in 
1913-14  to  11,982,320  tons  in  the  1918-19  crop  and  the 
forecast  for  the  1919-20  world's  cane  crop  is  12,559,000 
tons.1 

The  great  decline  in  European  beet  sugar  production, 
it  will  be  noted,  more  than  neutralized  the  phenomenal 
increase  in  the  cane  sugar  countries.  From  a  produc- 
tion of  8,180,964  tons  in  1913-14,  there  was  a  precipitous 
decline  to  3,642,664  tons,  and  the  forecast  for  the  1919-20 
crop  is  even  below  this  point,  being  but  3,409,000  tons. 
The  total  world's  production,  as  a  result  of  the  Great 
War,  has  thus  fallen  from  18,738,326  tons  in  1913-14  to 
16,322,176  tons  in  1918-19. 

1  Since  the  above  was  written,  the  estimate  for  1910-20  has  been  reduced 
to  11,747,000  tons. 


56 

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EXHIBIT  27 


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Total  Beet  Su| 

O  .(_> 

P 

258  APPENDIX 

EXHIBIT  28 

EFFECT  OF  THE   GREAT  WAR  UPON  THE  WORLD'S 
SUGAR  EXPORTS 

The  changes  in  the  world's  sugar  exports  for  the  years 
1911  to  1918  for  all  exporting  countries  for  which  data 
are  available,  are  shown  in  the  table  on  pages  259  and  260. 
The  most  significant  fact  shown  is  the  total  annihilation 
of  the  sugar  export  trade  of  the  European  beet  sugar 
countries  to  the  advantage  of  the  cane-producing  coun- 
tries and  the  countries  possessing  excess  refining  capacity. 
For  example,  Austria-Hungary,  which  in  1913  exported 
1,184,000  tons  of  sugar,  exported  only  39,000  tons  in 
1917,  and  Germany  which  had  exported  1,231,000  tons 
in  1913  exported  but  16,000  tons  in  1918.  On  the  other 
hand  the  island  of  Cuba,  which  had  exported  only 
2,625,000  tons  in  1913,  exported  3,569,000  tons  in  1918, 
an  increase  of  almost  i  ,000,000  tons.  The  United  States, 
with  a  production  of  sugar  equal  to  less  than  half  of  its 
requirements,  and  therefore  with  large  import  require- 
ments, nevertheless  was  enabled  to  utilize  its  excess 
refining  capacity  to  refine  for  European  needs  788,000 
tons  of  raw  sugar  in  1916  and  505,000  tons  in  1917  as 
against  36,000  tons  in  1913.  After  the  United  States 
entered  the  War  and  rigorous  control  of  exports  was 
established,  only  168,000  tons  were  shipped  to  Europe. 

EXHIBIT  29 

EFFECT  OF  THE  WAR  UPON  THE  WORLD'S  SUGAR 
IMPORTS 

The  table  below  gives  the  imports  of  sugar  for  all 
principal  importing  countries.  For  recent  years  figures 
are  not  available  for  all  the  principal  countries.  France 
before  the  War  produced  sufficient  sugar  for  her  own 
needs  but  imported  330,000  tons  (mainly  from  her 


EXHIBIT  28 


259 


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EXHIBIT  29  261 

colonies)  in  1912  and  127,000  tons  in  1913.  During  the 
War  she  was  forced  to  turn  to  other  producing  countries, 
mainly  Cuba,  and  in  the  years  1915,  1916,  and  1917 
imported  somewhat  over  625,000  tons.  In  1918,  follow- 
ing more  rigid  rationing,  only  225,000  tons  were  im- 
ported. The  United  Kingdom,  which  had  imported 
2,206,000  tons  in  1913,  of  which  over  half  was  beet 
sugar  from  the  Central  Powers,  was  forced  during  the 
War  to  rely  upon  Cuba  for  raw  supplies  and  upon  the 
United  States  for  refining  capacity.  Accordingly,  follow- 
ing the  adoption  of  drastic  rationing  regulations  the 
imports  dropped  to  1,661,000  tons  in  1915  and  to 
1,464,000  in  1918. 


262 


APPENDIX 


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INDEX 


Agreements,  with  producers  and  re- 
finers, —  see  Cuba,  Hawaii,  etc. 
Agriculture,  Department  of,  27 
Alameda  Sugar  Company,  106 
Allies  (see  also  France,  Italy,  United 
Kingdom,  Belgium,  etc.),   coopera- 
tion with  to  purchase  Cuban  crop 
VII,   15,  1 6,  75 ;  sugar  problems  of, 
7;   objection  of,  to  higher  price  for 
Cuban  crop,  33 ;    sugar  position  of, 
39-41 ;     imports    of,    from    United 
States  and  Cuba,  40;    represented 
by  British  Royal  Commission,  60 
American  Refiners'  Committee,  mem- 
bers   of,    150,     178;     creation     of, 
provision  for  expenses  of,   19,   150, 
152,  187;    duties  and  functions  of, 

19,  47,     152-153,     179-180,     183; 
continuance    under    Sugar    Board, 
61,  177;    receives  authorization  to 
export,  82  ;  distributes  surplus  army 
sugars,  102,  103 ;  requested  to  super- 
vise   cane    distribution,    105 ;     sub- 
committee of  appointed  to  supervise 
distribution,     106;     fixes    basis    of 
proportionate  distribution  of  sugar, 
154,  187-188 

American   Sugar   Refining   Company, 

20,  154,  187,  207,  212 
Arbuckle  Bros.,  154,  187,  207,  212 
Army  and  Navy  sugar  supply,  49,  159, 

201,  254 

Army  sugar,  purchase  and  distribution 
of  surplus  stocks  of,  102-103 

Assignment  to  Royal  Commission,  one- 
third  of  Cuban  crop,  60,  202-204 

Attorney  General,  opinion  of,  on  com- 
binations of  producers,  12 ;  action  of 
on  prices,  106,  108,  118;  opinion  of, 
on  refiners'  contract  113;  action  of 
on  new  crop  sugars,  118;  receives 
powers  of  Food  Administration, 
123 


A".st via-Hungary  (see  Central  Powers) 

Authorization  for  formation  of  Sugar 

Equalization  Board,  Letter  of,  225- 

225 

Authorization  to  sell  under  Cuban 
agreement"  173-176 

Babst,  Earl  D,  16,  136,  150 

Ballou,  Sidney,  48 

Barkley,  W.  J.,  197 

Beet  farmers,  prices  paid  to,  for  beets, 
27;  letter  to,  from  Herbert  Hoover 
re  beet  acreage,  25 ;  dissatisfaction 
of  on  prices,  26;  state  commissions 
appointed  to  investigate  beet  raising 
costs,  26;  recommendations  of 
state  commissions  on  beet  raising 
costs,  27 

Beet  sugar,  destruction  of  production 
in  Europe,  5-6,  256-257 ;  movement 
of  to  East  to  alleviate  shortage,  14- 
15 ;  percentage  of  in  United  States 
consumption,  21 ;  decline  in  U.  S. 
production  of,  42 ;  price  fof^pulp  of 
crop  established,  53-54;  supply  of 
in  the  United  States  purchased  by 
Sugar  Board,  58;  new  crop  pur- 
chased by  Sugar  Board,  106 ;  United 
States'  production  of,  128;  price  for 
crops  established,  17,  53,  62;  de- 
liveries of  in  United  States,  1918- 
1919,  252 

Beet  Sugar  Distributing  Committee, 
efforts  of  in  distribution,  1 5 ;  crea- 
tion and  functions  of,  18,  62,  156- 
159,  188-195;  distributes  new  crop 
beet  and  surplus  army  sugars,  102, 

103 

Beet  sugar  manufacturers,  conferences 
with,  n,  12,  17,  50;  assurances  to, 
26,  34,  42 ;  cost  of  production  of, 
n,  28,  29,  55;  plans  for  control  of. 
ii,  17,  18,  45;  government  agree- 


263 


264 


INDEX 


ments  with,  12,  17,  18,  25,  61,  62, 
106,  155-160,  i88-igs 

Belgium,  5,  7,  256-257,  250,  262 

Bell,  James  F.,  elected  treasurer,  72; 
resigns  as  treasurer  and  director,  7  2 ; 
Board  expresses  appreciation  of  his 
services,  73  'J 

Bennett,  Lawrence  M.,  229 

British  Indian  crop,  decline  in,  90,  98 

British  Ministry  of  Food,  39  (note) 

British  Royal  Commission,  refined 
sugar  export  contract  with,  208-211 ; 
option  granted  to  refine  raws  in 
United  States,  61,  204-213 ;  assigned 
one-third  of  Cuban  crop  1918-19, 
60,  202-204  J  notified  to  lift  its  re- 
fined sugars,  96 ;  shipments  to,  101 ; 
stoppage  of  exports  to,  102 ;  bidding 
of  for  Cuban  sugars  advances  price, 
8;  purchase  of  one-third  of  Cuban 
1917-18  crop,  16,  136-148;  condi- 
tions of  the  usual  contract  form  of, 
147-148,  171-173 

Brokerage,  committee  on,  174 

Bruyn,  Charles,  106 

Bundy,  H.  H.,  204 

Burguieres,  E.  A.,  197 

By-laws,  of  United  States  Sugar 
Equalization  Board,  219-226 

California,  27,  86 

California  and  Hawaiian  Sugar  Re- 
fining Company,  17,  102,  103,  106, 
154,  187 

Canada,  3,  60,  80,  83,  256-257,  262 

Carson,  W.  M.,  174 

Central  Powers,  IX,  5,  7,  74,  256-257, 
259 

Certificate  of  Incorporation  of  Sugar 
Board,  215-219 

Certificate  Plan  of  Distribution,  63, 
64,  78 

Colonial  Sugars  Co.,  154, 18^.,  187,  207, 
212 

Colorado,  27,  87 

Congress,  VIII,  8,  118,  136 

Congressional  Inquiry,  116 

Connell,  Jas.  S.,  175 

Consumption  of  Sugar  in  United  States 
1909-1917,  7  (note),  1918  and  1919, 
249,  252,  253;  difficulties  in  restric- 


tion of,  36,  37,  44 ;  restrictions  im- 
posed, 22-24,  63-64,  67,  105-107 ; 
prewar  per  capita,  4,  36 ;  restrictions 
removed,  77-78;  necessity  for  re- 
striction of,  4-8,  34-41,  43,  44,  104- 
105 ;  reasons  for  removal  of  restric- 
tions upon,  74-77 ;  increase  in,  7, 
86,  90-91,  104,  125;  reduction  of, 
125 

Coordination  of  Purchase,  Division  of, 
49  (note) 

Costello,  E.  H.,  72  (note) 

Cost  of  sugar  production  (see  also 
beet  sugar,  Cuba,  Louisiana,  etc.) 
in  Hawaii,  30 ;  in  Cuba,  3 1 ;  in  Louisi- 
ana, 29,  30;  in  United  States'  beet 
industry,  26-29 

Council  of  National  Defense,  21 

Crop  estimates,  declines  in  during 
1919,  75  (note),  90-91 

Crops  of  the  World,  88,  91,  256-257 

Crossmore,  Edward  Y.,  106 

Cuba  (see  also  Cuban  Commission), 
insurrection  in,  8,  21;  export  com- 
mittee appointed,  80;  advance  in 
price  of  raws,  8;  sales  f.o.b.,  80; 
costs  of  production,  3 1 ;  pressure 
upon  to  export,  79;  requests  per- 
mission to  export,  79 ;  President  of, 
136,  137,  161,  174;  embargoes  por- 
tion of  crop,  8 1 ;  increased  produc- 
tion in,  6,  128,  256-257;  authoriza- 
tion to  sell  under  agreement  with, 
173-176;  committee  for  arranging 
commercial  terms,  136,  140 ;  stimu- 
lation of  production  in,  21,  22,  128; 
exports  of,  259 ;  allotment  com- 
mittee, 174,  176;  agreements  with 
United  States  government,  16,  50, 
5X>  S9>  I36-i49,  160-176;  adjust- 
ment committee,  1 75 ;  negotiations 
with  United  States  government,  31, 
50,  in,  116,  233-235 

Cuban  Commission,  submits  brief  on 
cost  of  production  and  price,  31 ; 
negotiations  with  Sugar  Board,  50; 
agreements  with  United  States 
government,  16,  50,  51-59;  repre- 
sentation on  Cuban  export  commit- 
tee, 80 ;  tenders  1920  crop  to  United 
States  government,  in;  withdraws 


INDEX 


265 


tender  of  1920  crop  to  United  States 
government,  116 

Cuban  minister  (see  de  Cespedes, 
Hon.  Carlos  Manuel) 

De  Cespedes,  Hon.  Carlos  Manuel, 
137,  160,  161,  175 

De  Lima,  E.  A.,  74 

De  Mesa,  Hannibal  J.,  137 

De  Zaldo,  F.,  174 

Dillingham,  F.  A.,  48 

Distribution,  problems  of,  34-41 ;  re- 
strictions reimposed,  101-107 ; 
f  remedial  measures  in,  14-15 ;  con- 
trol of,  17,  18,  19,  63-67,  125; 
certificate  plan  of,  63-67 ;  zone 
system  of,  66,  117,  121 

Douglas,  H.  A.,  18  (note),  156,  192 

Drake,  John  Ramsay,  15,  136,  150, 
204 

Drawback,  agitation  for  repeal  of,  8 

Drescher,  P.  C,  106 

Earle,  George  H.,  Jr.,  150,  178 

Earle,  H.  C.,  48 

Eldredge,  W.  T,  150,  179 

England,  see  United  Kingdom,  Brit- 
ish Royal  Commission  and  Allies 

Exchange,  New  York  coffee  and  sugar, 
10,  123 

Exports,  control  of  in  Cuba,  137; 
discontinued  with  all  but  alh'ed 
countries,  10,  14;  refiners'  business 
in,  under  supervision  of  Food  Ad- 
ministration, 19 ;  from  United  States 
and  Cuba  to  Allies,  40;  monthly 
1919  from  U.  S.,  248,  249,  250; 
removal  of  restrictions  upon,  78-83 ; 
arrangements  for,  78-83,  97;  re- 
strictions upon  temporarily  reim- 
posed, 100-102 ;  necessity  for  em- 
bargo upon,  100 ;  request  for  em- 
bargo by  Mr.  Zabriskie,  229-230; 
effect  of  war  upon,  258,  of  all  princi- 
pal countries,  1911-1918,  259-260 

Farr,  John,  150,  178 

Federal  Sugar  Refining  Co.,  154,  187, 

207,  212 
Food  Administration,  lacks  authority 

to  fix  prices  and  make  purchases  of 


sugar,  VIII;  its  sugar  problems, 
cause  of,  3-9;  action  to  reduce 
prices,  10-14;  shortage  conditions, 
alleviation  of  by,  14-15 ;  cooperation 
with  Allies,  15-16;  sugar  division, 
organization  of,  10,  16-17;  sugar 
trade,  mobilization  of  various 
branches  of,  17-20;  encouragement  of 
production  by,  20-22;  restriction  on 
consumption  by,  22-24;  1918-19 
crop,  problems  of  price,  25-34; 
1918-19  crop,  problems  of  distribu- 
tion, 34-41 ;  announces  formation 
and  purposes  of  Sugar  Board,  45 ; 
control  of  distribution  by,  63-65 ; 
announces  price  increase,  58;  urges 
anticipatory  purchases,  97 ;  organi- 
zation of  practically  dissolved,  100; 
enforcement  division  of,  empowered 
to  take  action  against  profiteering, 
108;  utilization  of  various  agencies 
of  by  Sugar  Board,  47-49;  powers 
of  transferred  to  Department  of 
Justice,  123;  summary  of  work  in 
sugar,  125-128 

Food  Administration  Sugar  Distribut- 
ing Committee  —  see  Beet  Sugar 
Distributing  Committee 

Food  Administrator  (see  Herbert 
Hoover  and  United  States  Food 
Administration) 

Food  Control  Act,  10,  17,  18,  20,  78, 
123,  155,  188,  196 

Food    Control    Bill,    VH,    VTTI,    n, 

12 

Foreign  Sugars,  purchase  of,  83-84 
France  (see  also  Allies),  usual  contract 
form  for  shipment  of  Cuban  sugars 
to,  171-173 ;  decline  in  sugar  pro- 
duction of,  6,  43,  256-257 ;  repre- 
sented on  International  Sugar  Com- 
mittee, 15;  imports  of,  from  United 
States  and  Cuba,  40 ;  price  to,  es- 
tablished for  Cuban  sugars,  59; 
represented  by  British  Royal  Com- 
mission, 60;  sugars  sent  to,  f.o.b. 
Cuba  80 ;  exports  of,  259,  imports  of, 
262 

Gardner,  Wm.  W.,  175 
Gay,  E.  J.,  196 


266 


INDEX 


Germany    (see   also  Central  Powers), 

4,  6,  34,  74,  256-257,  250 
Gilmour,  John,  174 
Glasgow,  Wm.  A.,  Jr.,  46,  48,  57 
Godchaux,  Leon,  Co.,  Ltd.,  182,  188, 

213 
Goetzinger,  M.  E.,  150,  155,  178 

Hannam,  W.  H.,  106 

Hathaway,  F.  R.,  254 

Havemeyer,  H.,  254 

Hawaii,  production  in,  6, 128,  256-257; 
importance  of  crop  in  United  States 
consumption,  21 ;  cost  of  sugar  pro- 
duction in,  30;  difficulty  of  obtain- 
ing nitrates  for,  30-31;  negotiations 
with  sugar  producers  of,  50;  im- 
ports of  refined  from,  252 ;  exports 
of,  259 

Hawley,  Robert  B.,  80,  116,  137,  233- 
235,  160,  161,  175 

Herbert  Hoover,  on  importance  of 
sugar  in  household,  VII;  recom- 
mendation of  to  Senate  Committee 
re  Sugar  Control,  VII,  VIII;  ap- 
pointed Food  Administrator,  10; 
appoints  George  M.  Rolph  chief  of 
sugar  division,  10, 16;  memorandum 
of  to  President  Wilson  re  legality  of 
agreement  with  producers,  10-12; 
contracts  with  producers  and  re- 
finers, 18,  19,  60,  61-62,  149-155, 
155-160,  176-201 ;  action  of  to 
prevent  destruction  of  Cuban  crop, 
21 ;  requests  voluntary  conserva- 
tion, 23 ;  letter  of  to  sugar  beet 
farmers,  25 ;  appoints  state  beet 
sugar  cost  commissions,  26;  as- 
surances to  beet  sugar  producers,  26 ; 
memorandum  of  to  President  Wil- 
son re  formation  of  Sugar  Board, 
42-44 ;  elected  Chairman  of  Board  of 
Directors,  45-46;  appoints  Oscar 
Strauss  to  investigate  refining  costs, 
52 ;  memorandum  of,  to  President 
Wilson  re  plan  of  sugar  control, 
SS-57;  estimate  of  post  Armistice 
world  sugar  position,  75;  cable 
of,  re  sugar  control  1920,  109- 
iii 

Houston,  Hon.  D.  F.,  236  • 


Howe,  E.  C.,  18  (note),  156,  192 
Howell,  T.  A.,  174 

Imperial  Sugar  Refining  Co.,  154, 
188 

Imports,  prewar  of  United  Kingdom, 
United  States,  and  Canada,  3-4; 
of  United  Kingdom,  France,  Italy, 
1913-1917,  40;  of  full-duty  sugars 
into  United  States,  1910-1919, 
83,  84;  removal  of  war  time  con- 
trol over,  119;  effect  of  war  upon, 
258;  of  all  principal  countries,  262 

Industrial  Board,  85 

International  Sugar  Committee,  crea- 
tion of  and  membership,  15-16, 
136;  purchase  of  Cuban  1917-1918 
crop,  13,  16,  22,  136-148;  expenses 
of,  provision  for,  19;  allots  various 
foreign  sugars  to  Canada,  83  ;  util- 
ization of  by  Sugar  Board,  49,  65 ; 
liquidation  of,  72 ;  purchases  of 
raw  sugars  by,  253 

Italy,  decline  in  sugar  production  of, 
6,  43,  256-257 ;  dependence  of 
upon  Western  Hemisphere,  7 ;  rep- 
resented on  International  Sugar 
Committee,  16 ;  imports  of,  40,  262  ; 
represented  by  British  Royal  Com- 
mission, 60 ;  usual  contract  form  for 
shipment  of  Cuban  sugars  to,  171- 
173 

Jamison,  Wm.  A.,  16,  136,  150 

Japan,  98,  256-257,  259,  262 

Java,  exports  of  to  United  Kingdom, 
4 ;  drain  on  tonnage  involved  in  ob- 
taining sugar  from,  5 ;  supplies 
available  in,  15,  87 ;  rapid  dis- 
appearance of  stocks  in,  89-90; 
production  of,  256-257;  exports  of, 
260 

Justice,  Department  of  (see  attorney 
general) 

Keeley,  E.  S.,  48,  72  (note) 
Kemper,  C.  D.,  196 

Le  Bourgeois,  J.  C.,  196 
Lodge,  Senator  H.  C.,  30-21 
Longe,  Ernesto,  137 


INDEX 


267 


Louisiana,  production  in,  7,  128,  256- 
257;  control  of  1917-18  crop,  19- 
20 ;  contract  of  sugar  producers  with 
American  Sugar  Refining|Company, 
20;  cost  of  sugar  production  in, 
29-30,  55 ;  price  of  8  cents  requested 
by  representatives  of,  51 ;  Food  Ad- 
ministration agreement  with,  re 
1918-19  crop,  62-63,  195-201 ; 
central  distributing  committee,  62, 
66,  102,  103,  196-201 ;  deliveries  of 
direct  consumption  sugar  from,  252 

Love,  S.  H.,  18  (note),  156,  192 

Lowry,  Frank  C.,  106 

Marine  strikes,  93,  99,  103-104 

McCahan,  W.  J.,  Jr.,  150, 154, 178, 188, 
207,  213 

McCarthy,  J.  A.,  106 

McManus,  Edward  S.,  175 

McNary  Bill,  signed  by  President 
Wilson,  119;  memorandum  of  Presi- 
dent Wilson  upon  exercise  of  provi- 
sions of,  119-122 ;  text  of,  117  ;  mem- 
orandum of  Directors^of  Board  upon, 
236-242 

Mendoza,  Miguel,  137 

Merritt,  Ralph  P.,  106 

Milling,  R.  E.,  48,  102,  196 

National  Sugar  Refining  Co.,  154,  188, 
207,  212 

Netherlands,  4,  5,  80 

New  York  Coffee  and  Sugar  Exchange 
(see  Exchange)  / 

Nine-Cent  Basis  for  refined  sugar,  re- 
quired to  maintain  beet  production, 
29;  objections  to  establishment  of, 
33 ;  requested  by  beet  producers, 
50;  adopted  for  United  States 
1918-19  crop,  53;  becomes  effec- 
tive, 58 

Oxnard,  Benjamin  A.,  150,  178 

Pacific  Coast  Equalization  Committee, 

106 

Parker,  Robert  M.,  150,  178,  254 
Pearl,  Raymond,  48,  230—232 
Pennsylvania  Sugar  Co.,  154,  188,  207, 

213 


Petrikin,  W.  L.,  18  (note),  156,  192 

Pharr,  E.  A.,  197 

Philippines,  22,  65,  91 

Porto  Rico,  sugar  production  of,  6, 
128,  256-257 ;  voluntary  coopera- 
tion of  sugar  producers  of,  10 ;  per- 
centage of  crop  in  United  States 
consumption,  2 1 ;  encouragement  of 
sugar  production  in,  22,  128;  repre- 
sentation of  in  Sugar  Board  organiza- 
tion, 47,  48;  attitude  of  on  price 
basis  for  1918-19  crop,  51  (note), 
54  (note),  storage  of  surplus  sugars 
of,  95 ;  interruption  in  crop  move- 
ment of,  96;  exports  of,  260 

Post,  James  H.,  105,  118,  150,  178,  254 

President  of  Board  (see  George  M. 
Rolph  and  George  A.  Zabriskie) 

President  of  the  Cuban  Republic,  136, 
137,  161,  174 

President  Wilson  (see  Wilson) 

Prices,  problems  of,  IX,  10-14,  25~34> 
50-59,  95,  107-108 ;  measures  taken 
to  solve  problems  of,  10-14,  50-59, 
107-108;  increase  in,  to  producers, 
27,  127;  nine-cent  basis  of  adopted, 
53,  58;  release  of  control  upon,  118; 
in  United  States  and  abroad,  July 
1919,  126 

Producers,  increased  return  to,  27,  127 

Production,  encouragement  of,  20-22, 
25,  26, 127, 128 ;  increase  of  in  United 
States  and  Cuba,  6,  128;  of  each 
producing  country,  1910-1920,  256- 
257 ;  war's  effect  upon,  255 

Pulp,  price  of  determined,  53 

Refiners  (see  also  American  Refiners' 
Committee),  competition  of  with 
allied  sugar  commission,  VII ;  margin 
for  refining  established,  12;  negotia- 
tionswith,  18;  government  contracts 
with,  19,  60-61,  149-155,  176-188; 
Raw  sugar  contract  terms  of,  144- 
147,  169-171;.  increased  refining 
costs  of,  31—32 ;  report  of  Oscar 
Strauss  on  refining  costs  of,  52 ;  mar- 
gin of  increased,  52 ;  requested  to 
stop  exports,  100;  subcommittee 
of  on  distribution  appointed,  106; 
grant  option  to  Royal  Commission 


INDEX 


for  refining  Cuban  raws,  204-213 
receipts  and  meltings  of,  245-246 ; 
shipments  of  sugars  from  U.  S.,  247- 
248;     monthly   meltings    of,     251; 
deliveries  of,  249 

Refining,  increased  cost  of,  31,  32-52 

Reserve  stocks,  38,  39,  57 

Revere  Sugar  Refining  Co.,  154,  188, 
207,  213 

Rickard,  Edgar,  74,  241-242 

Rionda,  B.  Braga,  174 

Rionda,  Manuel,  80, 116, 137,  233-235, 
160,  161,  175,  234 

Rolph,  George  M.,  member  of  Inter- 
national Sugar  Committee,  16,  136, 
150;  chief  of  Sugar  Division,  VIII, 
10,  16-17 ;  elected  President  of  the 
Board,  45,  64;  central  position  of 
in  sugar  control,  47,  48,  65;  re- 
signs as  President  and  Director,  73  ; 
Board's  appreciation  of  services  of, 
73 ;  authorizes  refiners  to  accept 
export  business,  82 ;  appointed  on 
Pacific  Coast  Sugar  Equalization 
Committee,  106 

Royal  Commission  (see  British  Royal 
Commission) 

Russia,  15,  256-257,  260 

San  Antonio,  Chamber  of  Commerce, 

102-103 
Savannah   Sugar   Refining    Co.,    154, 

188,  207,  213 
Saving  to  consumer  by  sugar  control, 

13,  14,  127 

Senate,  United  States,  12,  116 

Senate  Committee  on  Agriculture  and 
Forestry,  VII,  IX,  116,  120 

Shattuck,  Edwin  P.,  48,  74,  80 

Sherman  Act,  10-12 

Shipping,  relation  of  to  sugar  problem, 
3-7,  57,  65,  82,  83,  in;  Inter- 
national Sugar  Committee  to  seek 
economy  of,  16;  loss  of  by  sub- 
marines, 34 ;  effect  of  situation  of 
upon  Javan  stocks,  89;  strikes  in, 
93,  9Q,  103 

Shipping  Board,  15,  49  (note),  65,  82, 
103 

Shortage     conditions,    alleviation   of, 

14.  IS.  63-65,  100-107 


Sinsheimer,  S.  W.,  18  (note),  156,  192 
Spreckels,  Claus  A.,  150,  178 
Spreckels  Sugar  Company,  106 
State,  Department  of,  21,  119 
State  Food  Administrators,  function  of 
in  certificate  plan  of  distribution, 
64-67,  77 ;  address  of  Hoover  to,  75 
Stocks,    decline    in    reserve    supply, 
38-39;    in  refineries  1918  and  1919, 
251 
Strauss,    Oscar,    report    on    refiners' 

margin,  52 
Submarines,  34,  43 

Sugar  Commission,  VII,  VIII  (see  also 
British  Royal  Commission  and  U.  S. 
Sugar    Equalization    Board,    Inc.) 
Sugar    Distributing    Committee    (see 
Beet  Sugar  Distributing  Committee) 
Sugar  Division,  creation  of,  VIII,   17 ; 
relation  of  to  Sugar  Board's  work,  V, 
47 ;  chief  of  appointed,  10,  16 
Sundry  Civil  Appropriation  Act,  44 
Supplies  of  sugar,  importance  of  ade- 
quacy   of,    230-232 ;     problems   of, 
34-41,  94;  solution  of  problems  of, 
14-15,    63-67,    102-107,    118,    125- 
126 

Taft,  Robert  A.,  45 

Tarafa,  Jose  M.,  137 

Tariff  Commission,  United  States, 
28-30,  55 

Taussig,  F.  W.,  agrees  with  Hoover  on 
sugar  control  plans,  43  ;  Director  of 
Board,  46,  48;  advice  of  acknowl- 
edged, 57  ;  recommendation  of  1920 
sugar  policy  to  President  Wilson 
suggested,  1 1 1 ;  dissenting  view  of 
on  1920  sugar  control,  115 

Thomas,  Dwight  P.,  150,  178 

Todd,  Sir  Joseph  White,  15,  136,  150 

Turner,  W.  P.,  18  (note),  156,  192 

Union  Sugar  Company,  106 

United  Kingdom  (see  also  British  Royal 
Commission  and  Allies),  imports  of, 
4,  40,  262 ;  dependence  of  upon 
Central  Powers,  5,  7 ;  dependence 
upon  Cuba,  5-6;  represented  by 
British  Royal  Commission,  16,  60; 
option  of  for  refining  sugars  in 


INDEX 


269 


United  States,  60,  61 ;  consumption 
of,  3,  74;  price  of  Cuban  sugar  to, 
59 ;  conditions  of  usual  contract  form 
for  shipment  of  Cuban  sugars  to, 
147-148,  171-173;  exports  of,  260 

United  States  Food  Administration 
(see  Food  Administration) 

United  States  Sugar  Equalization 
Board,  Inc.,  DC,  X,  24;  reason  for 
formation  of,  25-42;  incorporation 
of,  44-45;  certificate  of  incorpora- 
tion of,  215-218;  by-laws  of,  219- 
225;  first  meeting  of  Directors  of, 
45 ;  authorization  for  formation  of, 
225-226;  election  of  officers  of,  45, 
74;  organization  of,  47-49;  Direc- 
tors of,  46;  source  of  revenue  of, 
53,  58-59 ;  capital  stock  of,  45 ;  ne- 
gotiations of  with  producers,  50-51; 
agreements  of  with  producers  and 
refiners,  59-63,  160-176,  176-188; 
assigns  one-third  of  Cuban  crop  to 
Royal  Commission,  '60,  202-204; 
action  of  on  refiners'  margin,  52 ; 
establishes  nine-cent  basis,  53,  58; 
purchases  and  resells  stocks  of  sugar, 
58;  assumes  control  of  distribution, 
65-66;  post  armistice  policy  of, 
71;  offices  of  moved  to  New  York, 
72;  reorganization  of,  72-74;  re- 
moves restrictions  upon  consump- 
tion, 74-78;  arranges  for  exports, 
78-82  ;  export  policy  of,  82 ;  policy 
of  on  purchase  of  various  foreign 
sugars,  83-84;  problems  of  disposi- 
tion of  surplus  stocks,  94-99;  re- 
imposes  restrictions  on  export  and 
distribution,  100-107 ;  purchases  and 
stores  surplus  Porto  Rican  sugars, 
95;  purchases  and  distributes  sur- 
plus army  sugars,  102 ;  also  new  crop 
beets,  103,  106  ;  reestablishes  zone 
system  for  refiners,  107 ;  action  to 
prevent  profiteering,  108;  Directors' 
letter  and  memorandum  to  President 
Wilson  re  1920  sugar  control,  112- 
115;  negotiations  of  with  Cuba  re 
1920  crop,  in,  112,  116;  Director's 
memorandum  to  U.  S.  Secretary  of 
Agriculture  on  McNary  Bill,  236- 
242;  magnitude  of  operations  of, 


125-126;  summary  of  work  of,  125- 
128;  liquidation  of,  122-123 


Voluntary     cooperation,     dependence 
upon,  Vm,  10,  23 


Warner,  Chas.  M.,  150,  178,  207,  212 
Warner  Sugar  Refining  Co.,  154,  188 
War  Trade  Board,  10,  78,  82,  100,  119, 

229-230 

Wemple,  Edward,  106,  180 
Western   Sugar    Refinery,    106,    154, 

188 
West    Indies    Transportation,    Joint 

Committee  on,  49  (note) 
Whitmarsh,  Theodore  F.,  elected 
Treasurer  of  Board,  45 ;  appointed 
Director  of  Board,  46,  48 ;  advice  of 
acknowledged,  57 ;  resigns  as  Treas- 
urer of  Board,  72;  elected  Vice- 
president  of  Board,  74 ;  cable  of  to 
Hoover  re  sugar  control,  1920, 
109;  letter  of  to  Mr.  Zabriskie  re 
1920  rationing  plan,  241-242 
Willett  and  Gray,  35  (note),  52  (note) 
Wilson,  President  Woodrow,  approves 
formation  of  Sugar  Board,  44-45, 
225-226;  approves  Board's  plans  for 
control  of  1918-19  crops,  57 ;  execu- 
tive policy  of  for  1920  control  an- 
nounced, 119-122;  subscribes  for 
capital  stock  of  Board,  46;  memo- 
randum to  from  Herbert  Hoover  re 
legality  of  voluntary  agreements 
with  trade,  10-12;  memorandum  to 
from  Hoover  re  formation  of  Sugar 
Board,  42-44;  cable  to  from 
Hoover  re  1920  sugar  control,  109- 
ii i ;  memorandum  to  from  Directors 
re  1920  control,  112-115;  letters  to 
from  George  A.  Zabriskie  re  purchase 
of  1920  Cuban  crop,  116;  authorized 
to  continue  control  by  McNary  Act, 
117;  letter  to  from  G.  A.  Zabriskie 
re  liquidation  of  Sugar  Board  and 
other  matters,  122-123 
Woolley,  Clarence  M.,  46,  48,  57 
World  War,  influence  of  on  sugar  in- 
dustry, 3-9,  87-88,  255-262 


270. 


INDEX 


Zabriskie,  George  A.,  Director  of 
Board,  46 ;  Director  of  distribution, 
46-47,  65 ;  advice  acknowledged, 
57 ;  elected  President  of  Corporation, 
74;  requests  refiners  to  cease  ex- 
portation, 100;  requests  embargo 
power  of  War  Trade  Board,  220- 
230;  cable  of  to  Herbert  Hoover  re 
1920  control,  109;  letters  to  from 
Cuban  representatives  re  1920 
Cuban  crop,  in,  233-235;  letter 
of  to  President  Wilson  re  purchase 
of  1920  Cuban  crop,  116;  letter  of 
to  Mr.  Jas.  H.  Post  re  restrictions 


on  consumption,  105 ;  urges  Amer- 
ican Refiners'  Committee  to  super- 
vise distribution,  105 ;  letter  of  to 
Mr.  Post  re  distribution  of  old  crop, 
118;  letter  of  to  President  Wilson 
re  McNary  Act,  liquidation  of 
Board,  etc.,  122-123;  letter  of  to 
Hon.  D.  F.  Houston,  236;  recom- 
mendations of  for  1920  sugar  policy 
to  President  Wilson  suggested,  in; 
letter  to  from  Messrs.  Rickard  and 
Whitmarsh  re  rationing  for  1920, 
241-242 
Zone  system,  66,  78,  106-107,  117,  121 


LIST  OF  TABLES 


HEADING  OF  TABLE 

UNIT  USED 

PAGE 

Imports  and  consumption  of  the  United  States, 
the  United  Kingdom,  and  Canada  .... 
Prewar  sugar  supply  of  United  Kingdom     .     . 
Sugar  production  of  United  States  and  Cuba   . 
Sugar  consumption  of  the  United  States  pre- 
war —  1916—17      

short  tons 
short  tons 
short  tons 

short  tons 

3 
5 
6 

7 

Increase  in  price  of  raws  June  i  to  Aug.  7,  1913- 

17 

cents  per  Ib. 

8 

Weekly  fluctuations  in  raw  sugar  prices,  .  Aug. 
7—  Dec.  17,  1917    

cents  per  Ib. 

13 

Average  price  paid  for  beets  per  ton  1916-17-18 
Cost  of  sugar  production  in  Louisiana     .     .     . 
Increase  in  refining  costs  

dollars  per  ton 
cents  per  Ib. 
cents  per  Ib. 

27 
29 
32 

Sugar  supply  situation,  June  i-Dec.  31,  1918 
Imports  from  U.  S.  and  Cuba  into  United  King- 
dom, France  and  Italy  

short  tons 
short  tons 

35 
40 

Prices  requested  and  prices  obtained  by  pro- 
ducers and  refiners    

cents  per  Ib. 

54 

Outline  of  world  sugar  supply  situation,  1919   . 
Available  supplies  for  U.  S.,  1919   
Exports  of  refined  sugar  from  U.  S.,  1914-18    . 
Exports  f.o.b.  Cuba,  1918-19  crop      .... 
Imports  of  full  duty  sugars  into  United  States, 
1910—18  

short  tons 
short  tons 
short  tons 
long  tons 

long  tons 

76 
77 
79 

80    , 
83 

Imports  of  full  duty  sugars  1919  by  months 
Sugar  crops  of  the  world  by  periods  of  produc- 
tion      

long  tons 
long  tons 

84 
88 

Forecast  and  outturn  of  1919  crops  compared  . 
Exports   (exclusive  Royal  Commission)    con- 
tracted for  by  refiners  prior  to  July  15,  1919 
and  amounts  shipped  thereafter       .... 
Schedule  and  actual  shipments  of  Royal  Com- 
mission sugars       

long  tons 

long  tons 
long  tons 

Qi 

IOI 
IOI 

Surplus  army  sugars  sold  and  distributed     .     . 
Raw  sugar  available  Sept.  20—  Dec.  31,  1919 
and  1918  compared        

Ibs. 
long  tons 

103 
105 

Wholesale  prices  of  refined  sugar  in  various 
foreign  countries,  July,  1919  

cents  per  Ib. 

126 

271 


272 


LIST   OF  TABLES 


HEADING  OF  TABLE 


UNIT  USED 


PAGE 


Sugar  production  of  U.  S.  and  Cuba,  1914-19        long  tons 
Receipts  and  meltings  for  each  refinery  for  the 

year  1918 long  tons 

Receipts  and  meltings  1919 long  tons 

Shipments  of  Royal  Commission  sugar  1918-19 

crop  by  each  refiner       long  tons 

Monthly  shipments  of  sugar  by  refiners  from 
the  United  States  excluding  Royal  Com- 
mission sugars,  1919  long  tons 

Deliveries  of  sugar,  exports,  and  consumption, 

1918  and  1919 long  tons 

Exports  from  the  United  States  by  months, 

1919  both  crops long  tons 

Refiners'  stocks  of  raw  and  refined  sugars  on 

various  dates long  tons 

Refiners'  meltings  monthly,  1919  and  1918  — 

totals  and  weekly  averages long  tons 

Deliveries  of  beet  sugar  monthly  1918  and  1919       long  tons 
Deliveries   of   Louisiana   direct    consumption 

sugar long  tons 

Imports  of  Hawaiian  refined  sugar     ....       long  tons 
Raw  and  washed  sugars  direct  to  consump- 
tion, 1918  and  1919 long  tons 

Purchases  and  allotments  of  raw  sugar  under 

Government  control long  tons 

Amount  of  sugar  arranged  for  by  the  commit- 
tee on  the  sugar  supply  for  the  army,  navy, 

and  relief  organizations Ibs. 

Sugar  production  of  all  principal  countries  .  .  long  tons 
Exports  of  sugar'  from  all  principal  countries  .  short  tons 
Imports  of  sugar  for  all  principal  countries  .  short  tons 


128 

245 
246 

247 


248 
249 
250 
251 

251 
252 

252 
252 

253 
253 


254 

256-257 
259-260 

262 


Printed  in  the  United  States  of  America. 


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